When you consider engaging a professional with Business Valuations or Business Appraisals experience, what do you see as the true value benefit for the time, effort and expense you will also invest? If you are like most business owners, you see the bottom line: Your value number. Nevertheless, there is so much more value to had from a Business Valuation.
Here are three ways you can add value to your return on investment in a Business Valuation:
1. Use it as Part of Your Exit Plan
An Exit Plan begins with a Business Valuation. This is because if you do not know where you are now, there is no way to map a plan that will get you where you want to be. Share your business appraisal with your financial adviser and CPA for valuable retirement and tax planning purposes. (More on this value-add in a future post…)
2. Use It As a Blueprint for Value Enhancement
While all Business Valuations or Appraisals highlight the Fair Market Value of your Business within the first few pages, the remaining 60 to 80 pages specify all of the impartial justifications for that dollar amount. Viewed another way, your business appraisal provides you with significant intelligence you can use to improve and secure your value going forward. (More on this in a future post)
3. Use it as Your Future Due Diligence Gathering Exercise
“Time kills deals!” One of the most costly time related deal killers exists between agreeing to a Letter of Intent and fulfilling the acquirer’s due diligence request. The exercise of gathering, organizing, and assessing the information for the business appraisal will dramatically cut the time it takes to deliver on a future due diligence request list. We are firm believers in the “Pre-Mortem” (Read a great article on this topic in the Harvard Business Review).
Having this information at the ready increases your credibility, the buyer’s confidence in proceeding and the momentum toward an efficient close. Taking too long to pull it all together creates frustration, doubts, fatigue, and renegotiation’s or failed transactions. I recommend you use this opportunity to create a backup (hard and electronic copy) of all of this information and keep it up to date and organized in an easily accessible and secure file.