How did the experts determine the value and why did their final number vary from one another. The reason is simple enough. There are subjective elements to
every business evaluation. Each of these experts put a value on the subjective
elements that goes along with their personal experience with the business that
is being evaluated. This will account for their differences in value. Most
business people if they really did get three appraisals would take the highest
one and be done with it.
What is needed to make an evaluation
What do the evaluators need in order to come up with a business evaluation? They need access to all of the financial records of the company. They need an
inventory list and value based on whatever method is used to get this number. It
is usually first in first out prices or last in last out prices. Both are valid
means to value an inventory. Projected sales figures and profit can be used to
add some value for the future to a present day value. They will also speak to
employees adidas superstar supercolor blauw , suppliers and competitors to see how they think the company is doing. They will look at what similar businesses have
sold for in the last couple of years and at the state of the present economy.
These evaluations will always be based on old information and with an ingredient
of future prospects. It is this amalgamation of the old and the possible that
causes the range of values from different experts.
Every evaluation needs to be heavily weighted to with future numbers or the price will be set to low. It has to take into consideration the prospects for
the company and its future business.
With all of these numbers, the professional will use different methods to come up with a price After this is done, the numbers are looked at and a
judgment is made as to what one seems to be the most correct. Again this is a
subjective decision.
Comparisons of prior sales in the industry
What have other businesses in the same industry sold for and how do they compare with the business that the evaluation is being done on. This information
is very helpful and should make the evaluation a little more realistic. These
sales comps will set the tone for how other businesses were rated as to their
sales and the selling price It should help in setting an asking price that
represents the current value of the company.
Where will the company be in three years
Looking at the growth curve of the business and assuming a similar rate of growth in the future adidas superstar supercolor lichtroze , one could come up with where the company will be in three years. If the growth has been stable for a number of
years, there is every reason to think it will continue at a similar rate if no
drastic changes are made and the customer base continues to grow. With this in
mind, the price of the business should take this future outlook into account.
When this is explained to the buyer adidas originals winkels nederland , then it must be validated with facts and figures that his advisors can peruse. A well-documented presentation will go along way in
alleviating doubts and questions about how you came up with your numbers and the
asking price.
Intangible factors to be considered
There are some factors that enter into the evaluation of a business that cannot be reduced to shear numbers and accounting sheets. If the business being
evaluated has a significant standing in the industry then this is worth
something in the price. If they get a large percentage of the available business
that is a plus factor for the business. If its reputation is impeccable then
that is another factor that is difficult to put into accounting terms. All of
these intangibles when added together make the company more valuable than it
would seem to be from just the financials. This is why it is important to
investigate and questions others about the company. If the business is the
result of one strong individual who will not be there when it is sold, then that
could present a problem that could be difficult to overcome. Be very careful
about this kind of business.
Intangible assets such as these are hard to put a number on unlike the hard assets of the company. Equipment can be valued at a depreciated value, which
could then be used to set a foundation for the final price.
Is there going to be an ongoing need for your business
This one question when answered will help with the question of should you bu
