Small BusinessValuation
Get a business appraisal from a certified professional to preserve your most valued asset – your business.
An accurate business valuation prepared by a certified appraiser delivers critical insights that help you buy, sell or inform strategic planning decisions.
Why Small Business
Valuations Matter
Knowing the true worth of your business helps you make informed decisions, and it ensures you get the best value. Understanding market conditions and how they impact valuation is critical for any business owner, which is why a business valuation is vital and useful when you are:
Selling or Buying a Business
Accurate valuations ensure you negotiate a fair purchase price and receive maximum value during a sale.
Resolving Partnership Disputes
An objective valuation provides a clear basis for equitable settlements between partners.
Estate Planning
Valuations help in the fair distribution of business assets and ensure your estate plan reflects the true value of your business.
Raising Capital
Understanding the worth of your business is essential for attracting investors and securing funding.
Comparable Private Transactions Method
The Comparable Private Transaction Method involves valuing a business by comparing it to similar companies that have been sold recently. This method uses financial and market data from privately held company transactions that are comparable in terms of industry, size, and financial performance. Pricing multiples, such as EBITDA or SDE multiples, are derived from these transactions to estimate the value of the subject business. This method is particularly useful when there is a sufficient amount of comparable transaction data, allowing for a more accurate and market-based valuation.
Capitalization of Earnings Method
This method involves taking the company's current earnings and dividing them by a capitalization rate, which reflects the required rate of return for an investor. The capitalization rate accounts for the risk and growth prospects of the business. This method assumes that the company's future earnings will remain stable or grow at a consistent rate, making it suitable for businesses with predictable and steady income streams. The result is a single value that represents the present worth of the business based on its ability to generate earnings over time.
Multi-Stage Growth Method
The Multi-Stage Growth Method values a business by projecting its future cash flows across different growth phases—initial rapid growth, a transition phase, and a stable, long-term growth period. These projected cash flows are then discounted back to their present value using an appropriate discount rate, reflecting the varying risk and return expectations at each stage. This method is particularly useful for businesses expected to experience changes in growth rates over time, providing a more nuanced valuation than single-stage models.
Discounted Cash Flow (DCF) Method
The Discounted Cash Flow (DCF) Method values a business by estimating its future cash flows and discounting them back to their present value using a discount rate that reflects the risk associated with those cash flows.
Adjusted Net Asset Value Method
The Adjusted Net Asset Value Method values a business by adjusting the book value of its assets and liabilities to their current market values, providing an estimate of the company's worth based on the net value of its tangible and intangible assets.
Step 1: Data Collection
Your certified appraiser will guide you on what financial documents are needed for the valuation, including profit and loss statements,balance sheets, tax filings, and other relevant records. Organizing these documents helps streamline the valuation process and ensures that nothing is overlooked. We also review past expenses to identify any one-time or non-recurring items that may be considered for potential addbacks.Additionally, we search for discretionary expenses, such as personal or non-essential costs, including donations, that might also be considered for potential addbacks.
Step 2: Normalization and Adjustment
During the valuation process, we adjust the financial statements for valuation purposes. These adjustments, based on our interview with the owner(s), focus on non-operational expenses and non-recurring expenses to provide a clearer picture of the business’s true performance. It's important to note that these adjustments are made within our proprietary valuation model and do not alter your actual financial statements in your accounting software.
Step 3: Benchmarking and Valuation
After collecting, reviewing, and adjusting your financial data, we benchmark your company against similarly sized businesses in the same industry. This comparison provides valuable insights and highlights potential adjustments necessary for an accurate valuation. These steps culminate in a well-documented and insightful valuation, ensuring a clear understanding of your business's true financial standing.
Annual Planning
Standard Annual Appraisal Report
As a business owner, annual planning is key to staying ahead and making informed decisions. Our 35+ page Standard Annual Appraisal Report, prepared by a NACVA Certified Appraiser, provides the insights you need to assess your company’s value and guide your strategic planning. This comprehensive report helps you understand your business’s financial position and opportunities for growth, ensuring you’re ready to tackle the year ahead with confidence.
This professional-grade report is prepared by a NACVA Certified Appraiser and includes:
- A detailed 35+ page analysis
- Prepared by a NACVA Certified Appraiser
- Ideal for annual business planning and growth strategies
- Fast turnaround (2-5 days)
- Utilizes 6 proven valuation methods
- Includes industry benchmarking
- Includes Certificate of Financial Stability
Buying or Selling
Standard Business Valuation Report
Need a reliable business valuation prepared by a certified appraiser to support buying or selling a business? Our 35+ page Standard Business Valuation Report delivers comprehensive insights quickly at a price you can afford.
This professional-grade report is prepared by a NACVA Certified Appraiser and includes:
- 35+ page report
- Prepared by NACVA certified appraiser
- Ideal for buying or selling businesses
- Fast turnaround (2-5 days)
- 6 Valuation Methods
- Industry benchmarking
Divorce and Disputes
Certified Summary Valuation Report for Divorce and Disputes
Whether you're navigating a divorce or partner disputes, this 65+ page report prepared by a NACVA Certified Appraiser ensures your business valuation stands up to scrutiny.
This professional-grade report is prepared by a NACVA Certified Appraiser and includes:
- 65+ page report
- Prepared by NACVA certified appraiser
- Ideal for full or partial ownership interest
- Accepted by courts, IRS and lenders
- Expert selected valuation methods
- Hand-picked business comps
Gift & Estate Planning
Certified Summary Valuation Report for Gift & Estate Planning
When planning for the future—whether it's gifting shares or preparing your estate—our 65+ page Certified Summary Valuation Report ensures your business's worth is accurately documented and defensible.
This comprehensive report, meticulously prepared by a NACVA Certified Appraiser, offers:
- 65+ page report
- NACVA certified appraisal expertise
- Ideal for gifting or estate transitions of full or partial ownership interest
- Accepted by the IRS, courts, and lenders
- Expert-selected valuation methods
- Comparable business data hand-picked for accuracy
Capital Raise and Start-ups
Certified Detailed Valuation Report for Capital Raises
If you're preparing for a capital raise or need a solid valuation for your start-up, our 100+ page Certified Detailed Business Valuation Report provides the reliable insights you need to secure funding and fuel growth.
This comprehensive report, prepared by a NACVA Certified Appraiser, includes:
- 100+ page in-depth report
- NACVA certified appraisal for credibility
- Ideal for valuing early-stage and growing companies
- Respected by investors, lenders, and financial institutions
- Premium data sources like PitchBook for private company analysis
- Tailored valuation methods and industry comparables
Small Business Valuation
Reports we offer
Annual Appraisal Report
As a business owner, understanding the true value of what you've built is essential for shaping your future. Our Standard Annual Business Appraisal Report, prepared by a NACVA Certified Appraiser, offers personalized insights like hand-picked comparable sales, custom financial adjustments, and expert valuation methods. With a personalized video and free consultation, we help you make informed decisions, secure financing, win contracts, and plan for growth. This report is a powerful tool to empower your business and drive success.
Essentials Business Valuation Report
Looking to buy or sell a business? Our Essentials Business Valuation Report is a quick and cost-effective way to determine your business's market value. This 18+ page report includes a clear summary of your business's worth, using both market and asset-based approaches. We analyze recent sales and Seller's Discretionary Earnings (SDE) multiples to give you an accurate valuation.
Perfect for small businesses with under $2 million in annual revenue.
Standard Business Valuation Report
Need a more detailed analysis for buying or selling a business? Our 35+ page Standard Business Valuation Report offers an in-depth evaluation with a fast turnaround. It includes everything from our Essentials Report, plus additional insights like EBITDA multiples (if applicable), cash flow capitalization, multi-stage growth analysis, and benchmarking against industry standards. Perfect for getting a comprehensive view of your business's value.
Certified Business Valuation Summary Report
Looking for a formal and reliable business valuation? Our 65+ page Certified Business Valuation Summary Report offers a thorough assessment, prepared and signed by a NACVA Certified Appraiser. This report follows strict professional standards and provides everything needed for legal purposes like buy/sell agreements, estate planning, divorce settlements, or litigation. It ensures a precise and defensible determination of your company’s fair market value.
Proven Expertise Across Diverse Small Business Industries
BizWorth has extensive experience serving a wide range of small businesses with valuations, including:
- Retail Stores and Boutiques
- Restaurants and Cafes
- Professional Services (e.g., Law Firms, Accounting Firms)
- Real Estate Agencies
- Construction and Contracting Businesses
- Marketing and Advertising Agencies
- Health and Wellness Centers (e.g., Gyms, Spas)
- Technology Startups
- Automotive Repair Shops
- Educational Services (e.g., Tutoring Centers, Daycares)
- Specialty and Craft Shops
For a complete list of industries we serve, please visit our Industries Page.
Proven Expertise Across Diverse Small Business Industries
BizWorth has extensive experience serving a wide range of small businesses with valuations, including:
- Retail Stores and Boutiques
- Restaurants and Cafes
- Professional Services (e.g., Law Firms, Accounting Firms)
- Real Estate Agencies
- Construction and Contracting Businesses
- Marketing and Advertising Agencies
- Health and Wellness Centers (e.g., Gyms, Spas)
- Technology Startups
- Automotive Repair Shops
- Educational Services (e.g., Tutoring Centers, Daycares)
- Specialty and Craft Shops
For a complete list of industries we serve, please visit our Industries Page.
The Key Components of a Business Valuation Report
Understanding the different components of a business valuation report is essential for making informed decisions.
Equity Value
Asset Sale Value
Enterprise Value
Key Performance Indicators (KPIs)
Key Factors in a Small Business Valuation
Consideration of the following factors ensures BizWorth provides a comprehensive and accurate valuation tailored to the specific characteristics and needs of small businesses.
A Small Business Valuation Company You Can Trust
At BizWorth, our commitment to providing independent, USPAP-compliant valuations has earned us a reputation for excellence. We proudly serve a diverse range of clients, including business owners, brokers, CPAs, attorneys and lenders.
Let us help you make informed decisions about your business investments with confidence and clarity. Get an online quote today!
Your Small Business Valuation Team
Our certified appraisers adhere to the highest standards, including the Uniform Standards of Professional Appraisal Practice (USPAP). By following these rigorous guidelines, we ensure our valuations are both reliable and capable of withstanding scrutiny.
BizWorth is here to help
We provide valuations for small businesses. Click the green button below to discover how our accurate and unbiased valuations can benefit your organization.
Get an Instant QuoteAdditional Services
Let us help you achieve a precise and defensible business valuation for your most valued investment. Get an online quote today!
Frequently asked questions
Business valuation is the process of determining the economic value of a business or company. It's used for a variety of reasons, including sale value, establishing partner ownership, taxation, and even divorce proceedings.
Business valuations are essential for understanding the true worth of your business. They are critical during sales, mergers, acquisitions, and for raising capital. They also help in estate planning, resolving disputes, and enhancing business strategy. For more about why you may need a business valuation, check out the “Define the Purpose” section of BizWorth’s Definitive Guide to Business Valuation Reports.
A business valuation can be performed using various methods, including the income approach, market approach, and asset-based approach. The choice of method depends on the nature of the business and the purpose of the valuation. For more about how business valuations are performed, check out the “Read the Report” section of BizWorth’s Definitive Guide to Business Valuation Reports.
Typically, you'll need to provide the past three years of financial statements (income statements, balance sheets, cash flow statements), tax returns and information about the company, market and competition. For a complete list of required information, check out BizWorth’s Definitive Guide to Business Valuation Reports.
The cost of a business valuation can vary widely based on the complexity of the business, the purpose of the valuation, and the level of detail required. For most small businesses, costs can range from a $1-3k for buying and selling a business and $7-10k for estate planning, divorce and legal disputes.
Business valuations are typically performed by professional business appraisers who have specialized training and certification. These professionals are certified valuation analysts (CVAs), or certified public accountants who are accredited in business valuation (ABV). Professionals with an Accredited in Business Valuation (ABV) and Accredited Senior Appraiser (ASA) designation are also trustworthy sources of a business valuation.
IMPORTANT: If you are receiving an appraisal from an algorithm or anyone who does not have these credentials, chances are you are receiving a ballpark estimate or personal opinion rather than an actual business valuation or business appraisal. These estimates can be anywhere between 15-30% off the actual value of your business so be sure to only use these estimates for initial planning considerations but do not use these estimates for decisions that could cost you time or money.
Getting your business appraised annually provides an up-to-date assessment of its value, which is essential for accurate financial planning and forecasting. Regular appraisals ensure you have current data on your company's worth, enabling you to create realistic financial plans and forecasts. This information is crucial for setting achievable goals and making informed decisions about expansion, investment, and resource allocation. Additionally, understanding the drivers of your business's value allows you to implement strategies to enhance performance and increase profitability. Annual appraisals also offer the opportunity to benchmark your business against local competitors, providing valuable insights into market positioning and areas for improvement to boost your business’s value.
On the other hand, not having your business appraised every year carries significant risks. Without an annual appraisal, you may rely on outdated or inaccurate information, leading to poor decision-making and missed opportunities. This can result in undervaluing or overvaluing your business, affecting negotiations for financing, mergers, or acquisitions. Furthermore, in the event of unexpected circumstances like a sudden sale, retirement, or partnership dissolution, having an up-to-date valuation ensures you are well-prepared and can act swiftly and confidently. Regular appraisals also help identify potential issues early, allowing you to address them before they become major problems. Additionally, without benchmarking against competitors, you may miss critical insights that could help you stay competitive and enhance your market position.
As a business owner, whether you are operating in a booming or declining industry, enhancing the value of your business should be a constant priority. The right strategies can drive growth, attract investors, and improve your bottom line. Here are practical ways to boost your business's value regardless of the economic climate or industry trends.
- Obtain an Annual Business Valuation: Understanding the true value of your business is crucial, particularly when making strategic decisions regarding sales, investments, or growth. Industry multiples and rules of thumb (like the ones provided in this publication) while quick and convenient, often fail to provide an accurate valuation as they overlook the unique characteristics and current market conditions of a specific business. These methods typically do not consider the variability across industries, the impact of economic shifts, or include value of intangible assets that are unique to each business, which can lead to misleading valuations.
- A professional business valuation prepared by a certified appraiser, however, offers a comprehensive and objective assessment, considering all pertinent factors, including intangibles and current market trends. This not only aids in identifying areas for improvement but also serves as a reliable basis for negotiations with potential buyers or investors, ensuring that business decisions are informed and reflect the true worth of the company.
- Diversify Your Revenue Streams: One of the most effective ways to safeguard your business against market fluctuations is to diversify your revenue sources. This could mean expanding into new markets, adding new customers, developing new products, or adding complementary services that appeal to your existing customer base. Diversification not only spreads risk but also opens up new avenues for growth.
- Strengthen Your Financial Health: Robust financial management is crucial for enhancing business value. This involves more than just keeping good books. Focus on improving cash flow, reducing debts, and managing expenses efficiently. Consider hiring a skilled financial advisor to uncover hidden opportunities for savings and investment. Transparent and reliable financial reporting also builds credibility with potential investors and lenders.
- Enhance Operational Efficiency: Streamlining operations can significantly reduce costs and improve service delivery. Evaluate your processes regularly and identify areas where you can cut fat. Technology can be a great ally here; modern software solutions can automate routine tasks, reduce errors, and save time. Lean operations not only increase profitability but also make your business more attractive to potential buyers.
- Focus on Quality and Innovation: In any industry, quality and innovation are key differentiators. Consistently delivering high-quality products and services fosters customer loyalty and enhances brand reputation. Simultaneously, staying ahead of industry trends and being open to innovation can set you apart from competitors. Investing in research and development might seem daunting, but it is often essential for long-term sustainability.
- Build a Strong Team: Your employees are your most valuable asset. Investing in their professional development can bring immense returns. A motivated, skilled team is more efficient, innovative, and capable of driving your business forward. Additionally, a strong leadership team reassures investors and partners of your business's stability and growth potential.
- Cultivate a Strong Brand: A strong, recognizable brand can significantly increase the value of your business. Effective branding goes beyond just logos and taglines; it encompasses the customer's entire experience with your company. Build a brand that stands for reliability, quality, and customer commitment. Strong branding makes your business a preferred choice for customers and a valuable asset in the eyes of potential buyers.
