Selling
Your Business
How
To Choose A Business Valuation Expert
When
selling a business, one of the first question you need to ask
is, do you need to pay a business valuation expert to appraise
your business? If you're a small company or a simple service
business with few assets your accountant's valuation may be
all you need.
One
of the key factors in successfully selling your business will
be setting the right asking price. You want to get the maximum
value you can for your business. But you also don't want to
set the price too high or you may turn off all your best prospects.
Unfortunately, too many sellers set themselves up for frustration
by overpricing their business. For this reason many business
owners eventually come to the realization that it's worth the
money to have a valuation expert appraise the business.
In addition
to the confidence you'll have in knowing your not undervaluing
or overvaluing your company, a written valuation - prepared
by an expert - can help you justify your asking price when negotiating
with buyers.
Expect
to pay the appraiser at least $100 an hour. A simple oral valuation
may cost as little as $500. A more detailed written valuation
will run $2,500-$5,000 or more depending on the complexity of
your company. When interviewing appraisers look for one or more
of the following professional designations listed below. These
designation are not required by law, but a full time appraiser
with any experience will probably have one or more of these
designations.
Initials:
C.B.A. Title: Certified Business Appraiser
Institution:Institute of Business Appraisers
Initials:
A.S.A. Title: Accredited Senior Appraiser
Institution: American Society of Appraisers
Initials:
CPA/ABV Title: Certified Public Accountant
Accredited In Business Valuation Institution:
American Institute of Certified Public Accountants
Initials:
CVA Title: Certified Valuation Analyst Institution:National
Association of Certifeid Valuation Analysts
If your
going to pay for a written business valuation you should take
the time to interview several candidates so you can compare
credentials, cost and references. If you decide all you need
is an oral valuation, you'll likely have to choose your appraiser
based on a phone interview. Since the fee is low, most valuation
experts won't be interested in going through a lengthy selection
process.
When
you select your appraiser have him draw up a Business Valuation
Agreement that spells out the fees, what his valuation report
will cover and
the expected time of completion.
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