Why Independent Business Valuation Services are Important

When the time comes to sell your business or when you are looking to purchase a new business it is important that you are aware of the value you are dealing with for your company or the company that interests you. Many sellers have a business valuation service provider create an estimated value before they list their business. The buyer can use the provided valuation or obtain an independent valuation before making an offer to purchase the business.

Independent valuations are your choice, but they can be important. There are different methods of valuation and even different costs involved. If the seller has chosen a basic calculation analysis type valuation and you would like more details as to how the valuation was formed, the expense of an independent valuation is your responsibility.

As a seller of a business, you will want a valuation to determine your asking price and to show to potential buyers. Do not become irritated or offended if the buyer prefers to have his own independent valuation done as well. This is simply good business sense, in fact, if you have a potential buyer who does not have questions about the value of the business and who takes your list price and provided information at face value then you are likely dealing with a novice business person. Remember knowledge is power, so the more information you provide and the more information the purchaser collects the better the sale will go.

No one wants to purchase a business blindly or rely on a valuation presented by the seller without first doing his or her own investigating of the value of the business. What happens if you purchase the business based on the owner’s valuation and the asking price only to find that the valuation was incorrect and that the business is worth much less than you paid? You have taken a loss on an investment, and have no one to blame but yourself for not being an informed buyer.

The cost of an independent valuation is minimal when compared to what you stand to lose if you make a poor purchasing decision.