business valuation

Why Opt for an independent business valuation?

You’d be surprised how many people buy or sell a small business without obtaining an independent business valuation. It’s fraught with danger for the buyer; and for a seller, it may result in getting less than the business is worth, or having difficultly selling the business because it appears to be over-valued.
What constitutes an ‘independent’ business valuation? An independent business valuer is one who has no motivation to inflate the value of the business – for example, he or she has no previous relationship with the person seeking the valuation, no financial interest in the business, and nothing to gain if the business is sold.
While doing your own figures, getting your own accountant to value your business, or taking up an offer of a free valuation from a business broker might seem like a good idea at the time, an independent business valuation offers a number of advantages for those selling or buying a business. Here are a few points to consider:
Most accountants undertake business valuations and while your accountant may be more than trustworthy, your prospective buyers may see the accountant as being on your ‘side’. The broker who is selling your business stands to gain a commission upon sale; and again, while your broker might be entirely accurate with his or her valuation, prospective buyers might suspect it’s a bit like asking a real estate agent if the house they’re selling is well priced.
Independent business valuers who only undertake valuations don’t just do business valuations occasionally, so many are likely to have significant experience in valuing a variety of business types.
If you’re selling a business, having a valuation report on hand from an independent valuer can be a real plus. Prospective buyers like to see things on paper! Many approach a business for sale for the first time with great suspicion, so providing an independent business valuation up front can let them know that your approach to valuing the business has been professional and matter of fact.
If you’re buying a business, an independent business valuation is an inexpensive way of undertaking your due diligence – in other words, doing what you can to make sure you aren’t buying a lemon.
Of course, sometimes a lemon has potential – and might be an opportunity in disguise if it’s not over priced. But as a buyer, you don’t want to pay for that potential because it’s your money that needs to be used to realise that potential! If you are buying a bit of a lemon, then a business valuation may help you negotiate an unrealistic price down to one that is more in line with the true value of the business.
Whether you’re buying a business or selling one, an independent business valuation is an inexpensive investment that could prove to be very worthwhile.
Call  1300 916 973 or email us at Bizval today to arrange your independent business valuation – info@bizval.com.au
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