One of the most common questions at A Neumann and Associates, PA Business Brokerage, is how do you determine the value of a business. This is a very important question as there are some misconceptions and risks if the worth of a business is not appraised correctly and by the right parties. For a PA Business Valuation, the only way to obtain true market value is with a certified business valuation conducted by an expert third party. So you are a business owner in Pennsylvania. You need a business valuation PA and maybe you are unsure how to go about it. By doing research, you can come up with numerous calculations to arrive at a value of the worth of your business. Well which formula do you use?
The answer is simple, none. There is not one single formula that can accurately determine true market value. In fact, there are not even a handful of them that together can establish an accurate reading on value. You will find large variations by using income multiplier formula, asset based formulas, calculation using net income, earnings, stock price calculations, etc. The variation is too great. There are huge risks in the misconception that formulas accurately determine value. Do they help, sure? But for PA Business Valuations there are many more things to consider.
One more major misconception is the belief that anyone can do a business valuation. If this is the belief, then most likely the business valuation will be done by the business broker representing the party. And this creates a conflict of interest that does not result in an objective determination of value. The party representing the seller will likely arrive at a very high valuation, while the party representing the buyer will come in low. For an accurate PA Business Valuation that is taken serious by both the buyer, seller, financers and anyone else involved it must be conducted by a third party. If not, the business valuation is basically useless when it comes to the business transaction.
Why do business owners need a business valuation? There are many reasons. For the purchase or sale of a business, a certified business valuation must be completed by of course a third party. The valuation wills not only show that the seller is serious, but it will be taken serious by the buyer as well and it will aid in the buyer obtaining financing. Business transactions are not the only reasons why business owners need PA business valuations. Often they are required for estate planning, refinancing, recapitalization, partnership splits, and divorce and even to evaluate opportunities to improve the business.There are many factors that go into valuing a business. Current market environment, recent similar sales, financing, interest rates, trends, supply, demand, regional, industry, government and global factors. These are just a few; there are many more factors that impact value, even potential, employee considerations, taxes and terms in a business transaction.
A Neumann and Associates specializes in business valuation PA using third party experts to provide certified business valuations. If you have any need to determine the value of a business, contact A Neumann and Associates for a free confidential consultation.