Small Business Valuation

Small Business Valuation Methods

Description and applicability of eleven (11) methods utilized

Conduct Small Business Valuation

VentureLine determines optimum method, then conducts the analysis online...

	Saves you time and money...
	Gives exacting expert analytical results...
	You need only answer a few questions and provide minimal financial data...
	Only the most accepted valuation methods used...
	VentureLine is your online small business analyst...

Determining the small business valuation of any enterprise is an expensive, complex and time-consuming undertaking, yet the volume of valuations being performed each year is increasing substantially. A leading cause of this growth in volume is the fact that a valuation is frequently used in setting a price for an enterprise that is being bought or sold. Professional valuations are now also being used by financial institutions to determine the amount of credit that should be extended to a company, by courts in determining litigation settlement amounts and by investors in evaluating performance of company management. Lastly, a valuation is often required under a variety of accounting and tax regulations.

Valuing a small business is relatively expensive when completed by an appraiser or a certified public accountant using a combination of: an understanding of generally accepted small business valuation principles, judgment, plus experience. This need not be the case today. VentureLine provides a cost effective, 100% interactive methodology to determine an approximation of your small business value. Whether a user of the VentureLine method is a business or financial professional, or considerably short of being a financial genius, the most commonly used methods by professionals for arriving at an approximation of small business value are now made available interactively through VentureLine over the Internet.

The two primary most widely used and accepted types of valuations are asset value and income value.

• Asset valuations consider the business to be a collection of assets that have a marketable value to a third party in an asset sale. Asset valuations are typically used for businesses that are ceasing operation and for specific types of businesses such as holding companies and investment companies. Asset valuation methods include the book value method, the adjusted book value method, the economic balance sheet method, and the liquidation method.
• Income valuations are based on the premise that the current value of a small business is a function of the future value that an investor can expect to receive from purchasing all or part of the business. Income valuations are the most widely used type of valuation. They are generally used for valuing small businesses that are expected to continue operating for the foreseeable future. Income valuation methods include the capitalization of earnings method, the discounted future income method, the discounted cash flow method, the economic income method, plus other formula methods.

When performing a valuation, the appraiser is generally free to select the valuation type and method (VentureLine prefers a combination of the methods) in determining the small business value. Under the current professionally accepted procedures, there is no correct answer; there is only the best possible informed opinion for any given valuation of a small business. Using VentureLine’s advanced methods, you will be stepped through a series of simple questions to determine which method best suits the enterprise you wish to conduct the valuation upon.

Historically, financial statements and accounting records have provided the basis for determining value. Highly compensated appraisers generally spend a great deal of time extracting, aggregating, verifying and interpreting the information from accounting systems as part of the valuation process. Accounting records do have the advantage of being prepared in a generally unbiased manner using the consistent framework of Generally Accepted Accounting Principles (GAAP).

In determining the value of your enterprise, once the optimal technique is determined, your VentureLine MBA requests certain financial data and calculates the small business valuation based upon that data, saving you time while providing you a substantial reduction in cost. A downloadable printable valuation report is then prepared for your use.

Your personal Small Business Valuation Report will be retained by VentureLine, on a confidential basis, allowing you to access your report online at any time, thereby enabling you to print additional copies or to edit your businesses financial data.