What is a Business Valuation?
Business valuations are needed to support the legal business value to others outside of the owners. If you own a business, it is an important asset, and it is vital that business owners know the value of their business. But how exactly does a business valuation work? Though not quite as easy as assessing the value of an asset such as shares, where you simply multiply the amount of shares you own by the closing price of the shares, a skilled business appraiser can easily supply you with a business valuation.
Many people try to create their own business valuation simply by factoring in the historical financial statements of the company, but to correctly perform a business valuation, many other factors need to be considered.
Financial statements are created using GAAP (generally accepted accounting principles). This means that amortization, depreciation and other expenses are recorded based on accounting rules and not on economic realities. A financial statement is also unable to apply to the statement any intangible assets that a company might have, thus not reflecting an accurate business valuation.
Durkin Valuation Associates specialize in Business Appraisals. Our Senior Appraisers include a Phd., Masters, and J.D. Call for your Business Valuation needs. Phone (617) 720-0332
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