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Obtaining a business valuation is essential for gaining a clear understanding of your company's worth, enabling informed decision-making for growth or potential sale. Moreover, a professional valuation plays a crucial role in determining equitable business alimony during family law proceedings, ensuring a fair distribution of assets.
Standard of Values
There are many standards of value, including fair market value, fair value, synergy value, intrinsic value, investment value, etc. One of the first decisions that must be made is the appropriate standard of value to employ.
Approaches to Values
Traditionally, the development of a fair market value opinion is based on the consideration of one or more valuation methodologies or techniques falling under the three fundamental approaches to valuation: the asset approach, the income approach, and the market approach.
Discounts and Premiums
In business valuation, factors like the Discount for Lack of Marketability (DLOM) and Minority Interest Discount play a crucial role in determining the value of an investment or ownership interest. Marketability, control premiums, and other discounts or premiums must be considered to accurately reflect the unique attributes of a privately held company or minority ownership, ensuring a fair and comprehensive valuation.
Professional or Personal Goodwill
Goodwill, whether professional or personal, can greatly impact a business's overall value by reflecting the intangible assets that contribute to its success and reputation. This highly debated, fact-intensive factor in business valuations must be considered, especially in litigation cases.