As you look to sell your business or create a succession plan, a business appraisal plays a critical role in determining your company's real value. Here is what you should expect to learn -- and to do -- through the process.
A business appraisal, or valuation, is an independent assessment of your company's value in the context of market conditions and different scenarios. The most common standard is "fair market value," which is the cash (or cash equivalent) price that would change hands between a willing, unpressured and well-informed buyer and a seller on equal footing.
To ensure that the appraised value will be accepted by a purchaser or a court of law, contract with an Accredited Senior Appraiser from the American Society of Appraisers, or a Certified Business Appraiser from the Institute of Business Appraisers. Expect to pay less than $10,000 for a limited appraisal, or more for a comprehensive appraisal. And agree upon the cost before the appriaser gets started.
Then, prepare for the appraisal process, which usually takes about a month to complete. Include your CPA, banker and lawyer in this process, even your meetings with the appraiser. Here are the steps to expect:
If you found this article helpful, you might also want to listen to our podcast: Obtaining a Business Appraisal
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