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The first question business appraisers ask of clients is, “Why do you need to have your business valued?” The client may be surprised by this question for several different reasons. For example, they might think value is a single number or they might be faced with personal circumstances (e.g., poor health or a dispute) that are difficult to share with strangers.
We need to know the motivation (purpose) of the appraisal because it dictates the standard of value. The standard of value defines the governing assumptions – the relevant market (buyers and sellers) for the business – which has a big influence on value:
The moral of the story is that a client should be ready to answer the question, “Why do you need the business appraised?”, because different standards of value can lead the business to have legitimately different values. It is essential to get started with the right standard of value.
We Value Your Business!
About Western Reserve Valuation Services LLC
Western Reserve Valuation Services LLC, based in Columbus, Ohio, is a leading provider of valuation services and financial opinions relating to corporate finance transactions, corporate tax planning and compliance, succession planning and wealth preservation, employee stock ownership plans (“ESOPs”), financial reporting and portfolio / fund valuations. For more information, visit www.wesresvaluation.com or call (614) 448-3700.
Western Reserve Valuation Services is an affiliate of Western Reserve Partners LLC, a FINRA-member investment banking firm offering financial advisory services relating to mergers and acquisitions, capital raising and financial restructuring. For more information on Western Reserve Partners, please www.wesrespartners.com or call (216) 589-0900.