Small Business Valuation

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.

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