A business valuation is a tool usually used to get certified reports that are valid for IRS or litigation purposes. A simplier Broker Opinion of Value (BOV) can be performed to determine the listing price for a business ready for a sale. However, it can also be done to simply determine the business’s value as you are looking to improve and/or grow your business. That said, did you perform a BOV (or business valuation) a few months (or even years) ago and wonder if it is still valid? That is a great question. The answer is: it depends.
is only as good as its relevance. To determine this, consider the following questions.
- Have your financials remained essentially the same or have profits increased or decreased?
- Did you introduce new products or market to a new customer base?
- Have new services been added to your offerings?
- Did you change business locations or open a second location?
- Has your business acquired (or sold) assets?
- Has the size of your staff changed significantly?
- Has your service area changed in any significant way (population increase, etc.)?
Once you answer these questions, you can determine if it is time for a new business valuation. Essentially, if you find your business has changed substantially since the last business valuation, it is in your best interest to have a new business valuation done. It is best to make informed decisions and you want that information to be accurate and up to date.
If you need an answer that offers a tangible timeline, many experts say six months. During this period, you have been able to see two quarters of profits and depreciation, which could serve as significant components for a re-calculation of your business’s value. Of course, if in doubt, call your business advisor, and they can pick up from your last BOV or business valuation. The truth is that it does not hurt to see where your business currently stands, especially if you are considering selling your business.
Need an experienced business advisor to perform your BOV? Contact Transworld Business Advisors today. With locations around the country and expertise in countless industries, our team is ready to help.