Tuesday, April 29, 2008

Business Valuation, Do it Before You Have To

Business Week has a "small business" area on their website, though it's not usually the best location for comprehensive vs. glossy knowledge. However, a recent article on business valuation by Jeremy Quittner (dated April 16) is quite good and comprehensive in describing the best ways to value your business. I leave it to you to hit the link so you can read it for yourself.

My beef is that folks usually wait for a crisis to hit before performing a valuation, i.e. when a sale is to occur, a partner is leaving, etc. From a value maximization perspective, the time to do so it is not right before you want to sell it, rather it's after you've had a chance to address the issues and clean up the cash flows. You generally fix up your house before putting it on the market, no?

The article mentions CPA's, business appraisers, and business brokers as possible valuation experts. Appraisers have the best tools and knowledge for the job, I would endorse them over the other two.

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