Crucial Information Needed in a Business Valuation

The best thing about hiring a business broker San Diego is that he can help with business valuation. What is even better is the fact that when working with certain business brokerage firms, business valuation is offered free of charge. But what exactly is it and why is it so important?

A business valuation is simply an appraisal for your business. Your business brokers San Diego will inspect and analyze your whole business to determine the total value of its assets; both tangible and intangible assets. There are several methods used in business valuation. The method used will depend on the circumstances of the valuation. Most business brokers use a combination of valuation methods in order to get a more accurate figure. This is more so when it comes to pricing.

You can get a business valuation for any of the following reasons:

  • Prepare for the unexpected such as divorce, death or being disabled
  • Take advantage of opportunity when they arise
  • To help determine the buy-in or buy-out of a partner
  • Create an exit strategy
  • Expand the business

With that in mind, let’s take a quick look at the basic information your business broker San Diego will request when performing a business valuation. The information requested will depend on your type of business. Here are the key things you will be required to provide regardless of the valuation method that will be used.

Basic business information

Your San Diego business broker will need information about your company history, description and the governing documents. The goal here is to understand your type of business. If yours is a corporation you will need to provide documents pertaining to bylaws.

Employee information

Information about your employees will be required. The business broker San Diego will need to know about the number of employees your business has, their job descriptions, benefits, pay as well as benefit plan costs.

Company financial statements

These are the most important documents that will be requested in a business valuation. You need to prepare your financial documents for the last three years. This will include your tax returns, balance sheets and income statement.

Company assets

You will have to provide information about your business’ assets. This will include both tangible and intangible assets. Don’t forget to include intellectual property and liabilities.

Current legal issues

The business broker will also want to know if you have any legal issues. This is because ongoing legal issues will significantly impact the overall value of your business. Let him know if you have any litigation or other disputes that are ongoing.

The above list is incomplete. Your business brokers San Diego will give you a complete list of all the documents that will be required. Don’t be afraid to ask him questions.

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