Six Reasons to Have Business Valuations Performed
Business valuations are considered by accountants, brokers, and investors as critical for decision-making regarding selling, buying, or investing. Financial institutions use the information when determining interest rates on loans and whether or not to extend credit to applicants. While it is impossible to predict income, preparing for changes and fluctuations is what sets successful entrepreneurs and investors apart from those who don’t pay enough attention to planning.
The appraisals performed by brokers and industry experts are important for a number of reasons. Below are some instances of when they can be of value.
1. Preparing to Sell
Changes in ownership are part of the business world. The reasons for selling vary from other interests, to profit generation, retirement, and new opportunities. Regardless of the reason for selling, knowing what is the true and market value of the entity is essential to determine the right asking price. To this end, appraisals play an integral role in providing a foundation for decision-making regarding the selling price.
2. Preparing to Buy
Of course, the buyer wants to pay as little as possible, while the seller wants to maximise the profits from selling. In order to reach a balance and determine whether the entity is worth the asking price, the buyer can make use of brokers that are experienced in appraisals to help determine a reasonable purchase offer.
3. Preparing to Sell Shares
Potential shareholders want to know the worth of the entity in order to ensure that their money is well spent when buying into the business. Appraisals make it possible to put forth an accurate figure for shareholding. The same holds true when one of the owners wants to sell their shares. They want to ensure that they get the true value of their share in the entity.
4. Loan Application
Applying for loans to expand operations or to improve the financial standing cannot be done without professional valuations, as they provide the necessary credibility of information for the loan application.
5. Seeking Investors
Investors play an important role in providing the necessary financial support to growing businesses. They want credible information. In such instances, an owner’s evaluation is too subjective to ensure the credibility of the information. Making use of accountants and brokers who are experienced in performing the task is, therefore, essential. The information provides a clear picture of the potential of the business.
6. Strategic Planning
Knowing the worth of an entity will help with strategic planning. Even if the intention is not necessarily to sell or attract investments, it is essential to have business valuations performed, in order to identify the strengths, weaknesses, and progress of the business. Armed with this information, it is possible to identify where restructuring needs to take place in order to stay profitable.
Regardless of why and when you need business valuations, it is best to have them performed by experienced brokers. We meet the criteria and with an extensive network of brokers, we can perform this task regardless of where your retail store, fuel station, or restaurant is located in South Africa. Get in touch for a quote and assistance.