Business Valuations

A business valuation is the process of determining the economic value of a business or company.

This assessment takes into account various factors, including the company’s financial performance, assets, liabilities, growth prospects, industry trends, and market conditions. The valuation process involves analyzing financial statements, conducting market research, assessing the company’s operations and competitive position, and applying appropriate valuation methods and techniques to arrive at an estimate of the company’s worth. The result of a business valuation is expressed as a monetary value, representing the fair market value of the business based on all relevant factors and assumptions.

More About Valuations

How do you determine the value of my business?

In order to determine the value of your business, a member of our team will complete a business valuation. The process involves determining the fair market value of your business, and is based largely upon its financial performance, assets, liabilities, growth prospects, and market conditions.

There are 3 main approaches to Valuations:

Income Approach

This approach assesses the present value of the business based on its expected future earnings or cash flows. Methods under this approach include the Discounted Cash Flow (DCF) analysis, where future cash flows are discounted to their present value using a discount rate that reflects the risk and return expectations of investors

Market Approach

This approach compares the business to similar companies in the market that have recently been sold or are publicly traded. Methods under this approach include the Comparable Company Analysis (CCA), where key financial metrics and valuation multiples of comparable companies are used to determine the value of the subject business.

Asset Approach

This approach assesses the value of the business based on its tangible and intangible assets. Methods under this approach include the Asset-based approach, where the value of the business is determined by subtracting its liabilities from the fair market value of its assets, such as inventory, equipment, real estate, and intellectual property.

How much does a business valuation cost?

The cost of a business valuation is fairly reasonable compared to other forms of appraisals or valuations. The cost varies based on the size of the business, the time it takes to complete the valuation, and the overall complexity of the business valuation.

If the purpose of the valuation is due to selling the business through Coastal Business Advisors (CBA), then the fee will be deducted from overall commissions paid out to CBA upon sale of the business.

What information is required for a business valuation?

Once you have signed an engagement letter with Coastal Business Advisors, we will send you a list that outlines required documents and information for the valuation of your business. The list of documents includes, but is not limited to:

Financial Statements of the business for the last three to five years
Corporate and Personal Tax Returns for the last one to two years
Future Business Projections - ie. financial forecasts, business plans, growth strategies and market opportunities.
Assets and Liabilities: Information on tangible assets (e.g., inventory, equi ent, real estate) and intangible assets (e.g., intellectual property, goodwill)
Access to Management Team and Owner to discuss operations, competitors, market conditions, risk factors, historical data and performance, and KPI’s.
Legal and Regulatory Compliance (e.g., contracts, licenses, permits, agreements)

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Working With John at Coastal was a great experience for my acquisition team. John was able to define a target list for us, and approach the options we liked. We ultimately found an organization we purchased, and had the deal sorted quickly and professionally. I would recommend their services to anyone.

C. Lamont

We had the team at Coastal evaluate our business for us to see where we stood should we head to market. The Valuation provided for our organization was comprehensive and ultimately helped us renegotiate terms with our banking partners. A big thank you to the team at Coastal!

W. Frederick

What can I say about Sara? She found us the lender we needed and ultimately the highest valuations of our equipment to ensure we could see our way through an organizational transition. With the process complete I can honestly say the service and ultimately execution was second to none.

J. Newsmith