Services

Business Appraiser Utah | Services - Business Owner

Buying a Business

We work with buyers of businesses for one reason. We want buyers to feel comfortable when purchasing a business.
Determining the value of an existing small business can be a challenge for buyers. Much like buying a house, most buyers offer a price slightly lower than the asking price and then negotiate with the seller from there.

This sounds simple, but what if you could enter negotiations with a sound understanding of the value of that business? This can increase your confidence during the negotiation process.

A business valuation should be a part of the due diligence process. As a business appraiser in Utah, we have worked with individuals locally and nationwide to provide this service. We consider ourselves an advisor in the due diligence process.

Ultimately, our goal is to provide a proper valuation that uses the information obtained during the due diligence process. The valuation looks at historical earnings, current cash flow, potential profit, future market growth, and risk.

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Selling a Business

Determining the value of your business prior to selling is key. If the listing price of your business is too high, you’ll scare off potential buyers or limit the financing option of buyers. If your price is too low, you end up leaving money on the table.

As such, your goal as a business owner is to identify early on the value of your business in order to better position the company for sale. If you are planning on exiting within the next five years, it is a good idea to know the baseline value of your business today. Then you can develop a strategy to increase the value of your business.

An up-to-date business valuation can help you plan for the unexpected and expected sale. It can also help ensure you get the fair market value of your company and avoid selling for less than the company is worth.

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Growing a Business: Annual Valuations

You may be asking, why do I need to understand the value of my business while I am in the process of growing it?

Think of a valuation as a check up with your doctor. As with your health, you should be considering the state of your business year-after-year. Why? As a business owner you should be obsessed with tracking performance and understanding if the direction you are heading is adding value to your business or detracting from it.

A business valuation can help you understand where your business stands today and the potential for growth. A valuation gives insight into the strengths and weaknesses of your company, value drivers, and how a potential buyer will view your business. Through a business appraisal, you can develop strategies to grow your business.

Every business owner should obtain a yearly business valuation that can be referred to. A business valuation provides multiple facts and figures regarding the value of a company by observing market data, asset values, and the company’s cash flows. This enables you to measure growth and plan for the future.

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Growing a Business: Gift and Estate Tax Planning

As you strive to build your business, your business will reach a point where you are focused on the future. Every successful business owner should look into estate planning as a way to transfer assets to heirs, while minimizing taxes.

Most business owners have between 80-90% of their personal net worth tied up in the company they own – one highly non-liquid asset. Not only does this make estate planning difficult, but it also exposes the financial legacy you want to leave behind to your offspring at great risk. If your business is part of your estate, it is wise to obtain a business valuation. This can be done either prior to estate planning, gifting of interests, or after the death of the owner. It is important to have a plan in place for the future and begin now to develop a strategy to execute it.

By knowing the value of your business you can adequately prepare to fund future estate tax liability. Whether you are planning on selling, gifting or dissolving your business it is important to have an estate plan in place. This plan can then either pay the taxes or implement strategies to bypass them.

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Peak seeks to help small business owners build businesses that thrive. As such, we care about whether or not a business appraisal is right for you. Give us a call today, to see how understanding the value of your business is valuable.

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Frequently Asked Questions

What is your turnaround time for providing a valuation report?

The average turnaround time is between 5 – 7 business days. Peak specializes in providing top-tier valuations with valuable insights other companies don’t provide. We deliver higher quality valuations at a lower price and in less time than anyone else in the market because of the different approach we take in everything we do. The purpose of the valuation report will dictate the turnaround time.


 

What is the cost for a valuation report?

Cost depends on the purpose of the valuation. In addition, the level of detail that goes into the valuation analysis impacts pricing. The cost will be discussed in detail during a consultation call.


 

What level of detail is in a valuation report?

Peak provides two valuation reports:

  1. Complete Appraisal – Summary Report
    1. We provide this report when we work with:
      1. Mergers or acquisitions
      2. SBA or conventional financing
      3. Estate and gift planning
      4. IRS tax matters
  2. Calculation of Value also known as Value Calculations
    1. We provide this report when we work with:
      1. Assisting an owner or broker with establishing a list price
      2. Estate planning
      3. Business planning
    2. A calculation of value is NOT an appraisal since the appraiser is not concluding to a value. This type of analysis can be a valuable tool for business owners or professionals
  3. Report details consist of:
    1. Introduction and background
    2. Industry review and outlook
    3. Valuation methods
    4. Economic review and outlook
    5. Financial review, financial ratios, and projections

 


 

How do you value a company?

We look at three valuation methods in our summary valuation reports:

  1. Income Approach
    1. Under this approach, a business valuation expert will dig into the cash flow of the business. The ability to generate cash flow each year ultimately impacts the value of your business. As such, when you are building your business, consider the value proposition of growing your cash flow.
  2. Market Approach
    1. This approach is the most widely used and understood. When you want to know the value of your house or car, you do some quick research and find comparable cars or homes in your local area. The market-based approach is just that. This approach looks for comparable companies that are similar to your business.
  3. Asset Approach
    1. Rarely, is the asset approach relied upon for purposes of understanding the value of your business. However, there are instances where this approach makes sense. For instance, the asset approach is observed for asset-intensive businesses like manufacturing or businesses with heavy research and development costs. As the approach suggests, the value of your business can be derived from understanding the value of your assets. The idea is to determine the fair market value of your assets less liabilities.

 


 

Do you offer rush options?

YES. We offer 3-5 day rush options for an additional cost. Schedule a Consultation »


 

What documents do you require for a business appraisal engagement?

For a list of documents that may be required, review our blog post Documents Needed for a Business Valuation. Specific documents needed for your situation will be discussed during your free consultation.

We at Peak Business Valuation work with a variety of businesses. As a leading business appraiser in Utah and throughout the country, we welcome any questions you may have.

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