There are several types of valuations, and the methodology and documentation vary depending on the use of the report. Because
business valuation is part art and part science, valuations are subject to the appraiserâ€™s judgment, skill, quality and methodology.
Also, the purpose for your valuation needs to be considered. There are several generally recognized values.
Fair market value - The price at which the property would change hands between a willing buyer and a willing seller when the
former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable
knowledge of the relevant facts. If you are considering selling your business, a good Business Broker will be able to determine
the likely selling price of your business. He may charge you a reasonable fee, or it may be done at no cost to you.
Fair value - Legal standards to value. Often used in divorce, partnership dissolution, and other legal issues. Because the valuation
is likely to be challenged in court, it is best to get a formal valuation by an accredited valuation professional. Other uses may
include a by-sell agreement, insurance needs, setting the price for lower mid-market businesses, and other matters that may be
subject to litigation down the road.
Within each of these categories there are several different approaches to determining value. A simple web based calculator
cannot possibly give you an accurate assessment of the value of your business. There are too many factors unique to your
business that cannot be modeled by a simple calculator. Talk to a business broker in your area as a starting point. He may be
able to provide you a market assessment, or he may direct you to a valuation professional.