After contacting a business broker Orange County, the first thing he will recommend is for you to get a business valuation report. A business valuation is crucial when selling or buying a business. It is a report that will help you know how much a business is really worth. The report can also be used to identify the strengths and weaknesses of a business. It is only with a valuation report that you will be able to set a fair selling price. But what is really considered in a business valuation?
From its humble beginning, your business has come a long way. It has evolved over the years. During a valuation, your business brokers Orange County will want to see how your business has been performing in the last three to five years. This helps determine if the business is failing or thriving. You will need to provide documents of your business’ origins, journey, goals and financial records.
It is much harder to sell a business that is dependent on the business owner. Buyers are interested in independent businesses. This is why during a valuation you will need to provide information about your business. Potential buyers will need information on the job descriptions of your employees. The big question that needs to be answered here is this; can the business thrive without the owner? You also need to identify key employees and also provide information on leave entitlements.
Legal and commercial information
A business valuation is not complete without considering commercial contracts, licenses, lease agreements, permits as well as registrations. The legal and commercial information will impact the overall value of your business. It is imperative that you provide proof that your business complies with the relevant health, safety and environmental laws. You also need to disclose your current and pending legal proceedings.
Profit margins, asset market value, annual turnovers and assessment of the tangible assets fall under financial information. This is the most important step in a business valuation. Your business broker Orange County will need this information to know about the liabilities that your business has and if it is thriving or not.
Market information and industry conditions
Last but not least, the business broker will have to look at the outside forces. Your business is only as valuable as how much the market is willing to give. This is why timing is everything when selling. For an accurate valuation report, business brokers Orange County must consider the target market and the industry conditions.
A business valuation report is a must have even when you don’t plan on selling your business. It can help identify the strengths and weaknesses of your business. Make sure that you hire the right team for this. You also need to understand the valuation models that your valuation expert will be using.