• Understand Business Value
  • Fair Market Value
  • Industry Research & Analysis
  • Economic Research & Analysis
  

Evaluating Business Ownership E

   

A business Evaluation is the fundamental and technical analysis of a business, the consideration of economic and industry factors, and the application of financial models to determine the value of a business enterprise. Although the concept of a Business Evaluation may be foreign to many business owners, there are many reasons why someone would want or need an Evaluation.

  
Why a business Evaluation?

Most of the reasons that a company needs an Evaluation fall under four general categories: Raising Capital, Taxation, Exit Planning, or Litigation. Knowing your numbers is critical in today's competitive economy.

   
Fair market value

This is currently required by the IRS for any tax-related Evaluation. This assumes that the buyer and seller have all the same information about the company and similar motivation to transact a sale. In most cases, this will be the standard of value.

  
Intrinsic value

Generally this is the value to an individual. A seller may want more for the business because they started it and it was their life's work. That may not be what the market will pay, but to them, that is the value. This also goes for a buyer; some buyers may overpay for the opportunity.

Synergistic value

In a sale situation, it is worthwhile to consider this standard of value. This considers the additional value to the buyer due to synergies created from the purchase. This could result in a cost savings and increase the value to that specific buyer.

"The Evaluation really helped us understand what we were buying and the true value of what a business is worth. We highly recommend Cochran Consulting. 

- Mike D.

"I learned more about the value of my business and money from the team at Cochran Consulting than I could have expected. Today, I am much more confident about my future of our business."

- Jenny N.