Business Appraisal Services in Dallas
Wiley Financial is one of the leading providers of business appraisal in Dallas. We have over two decades of experience, which has allowed us to be among the most sought-after appraisers in Dallas. We accommodate companies from different industries, affording them the best services in the industry.
What is a Business Appraisal?
Business appraisal is the process of evaluating a company, asset, or performance against a set objective. It is done when a business wants to sell its operations or to address tax issues. An appraiser can use tangible and intangible assets such as trademarks, buildings, market competitiveness, etc.
Difference Between Business Appraisal and Valuation
While the two terms are used interchangeably, there exists a distinction between them. Physical assets undergo appraisal, while intangible assets undergo valuation. In addition, an appraisal provides a pricing guide while a valuation provides an actual business value, giving it legal standing.
Types of Business Appraisals
An appraiser in Dallas can conduct the following appraisals:
Equipment Appraisals
It is a fair and accurate value of an asset or equipment conducted by a certified appraiser. It has three valuation estimate types: forced liquidation, orderly liquidation value (OLV), and fair market value (FMV).
- Forced Liquidation
Also referred to as forced selling, it contains the involuntary sale of securities or assets for liquidity purposes. It happens when a business experiences an unforeseen situation. As you’d expect, it is conducted in case of personal issues, economic events, or legal orders.
It can happen at a personal level where the family of a deceased business owner is forced to sell some of the assets to pay off debt. The same applies to divorce cases; a company or assets can be sold and the money divided between the couple.
- Orderly Liquidation Value (OLV)
It estimates how much a piece of equipment would fetch should it be auctioned or sold in a similar style. OLV requires the seller to adopt the “as-is, where is’ approach when selling their tangible assets.
However, the appraisal assumes that the seller would allow all buyers to view the asset and place bids. In addition, the seller would control the process, unlike forced liquidation, where the first buyer is given priority, and the seller has no control.
- Fair Market Value (FLV)
FLV refers to the price the buyer and the seller of a specific asset have agreed. For the value to be accurate, it must meet the following conditions:
- There’s a reasonable period to execute the transaction.
- Both parties should have the freedom to carry out the transaction.
- The parties should put their interests first.
- Both parties should be knowledgeable about the subject asset.
Fair market value is significant in settling legal issues such as divorce. It determines how much a company or business owner should pay in taxes. Insurance companies also use FMV to assess the value of an asset in the event of insurance claims.
Restaurant Appraisals
Appraising restaurants in Dallas follows three approaches: a direct comparison, cost, and income. Since most people acquire restaurants in Dallas intending to reinvent them, an appraiser often includes the “highest” value of the restaurant. It is a more significant figure than the current restaurant price.
- Income Approach
It is an approach used by investors to determine a restaurant’s value based on the income it generates. It is the net operating income of business operations divided by the capitalization rate.
- Cost Approach
The approach assumes that the buying price of a restaurant should equal the cost of building a similar one. In short, the restaurant’s value equals the cost of land and construction. It uses two methods, which are reproduction and replacement methods.
The cost approach is ideal if one wants to build a new restaurant.
- Comparison Approach
It uses the value of a recently sold asset to determine the value of the subject business. However, the approach has a sale limit of one year.
Qualified Appraisals
Qualified appraisals in Dallas meet strict Internal Revenue Service (IRS) criteria. They are rigorous and often used for taxation purposes. For example, the IRS requires a Qualified Appraisal in exceptional cases.
The IRS dictates that a certified appraiser should conduct the appraisal within 60 days before donating property or assets.
Purposes of Business Appraisal
So why should you appraise your business in Dallas? Here are the main reasons.
Profitable Buying/Selling of a Business
As mentioned, assessing its value is paramount before selling, buying, or acquiring a business. It is to ensure you are not getting a raw deal. Business appraisal in Dallas allows the buyer or seller to know the accurate value of a company.
At Wiley Financial, we have the tools, resources, and expertise necessary to ensure selling or buying a business is a seamless task. We offer business appraisal services for different enterprises in Dallas at a pocket-friendly price.
To Settle Legal Disputes
Disagreements among owners or shareholders can affect the performance of a company. And it is in such scenarios that a buyout is inevitable. With an appraisal report, each owner or shareholder will tell how much of the proceeds they will get.
Moreover, a court will require an appraisal report if a company disputes with other companies. The information will determine what amount a firm in conflict needs to relocate to the case proceedings.
To Secure Funding
If a firm needs more funding, it will often approach investors. For the investors to buy their story, they’ll need to know the company’s value. The appraisal report gives details about a company’s future performance. The investors will tell if it is a profit-or-loss investment option.
To Plan for Future Acquisitions
A business appraisal shows you the position of your business at present and its future growth. As such, you develop strategies that will help you increase the company’s value, allowing you to acquire peer or better-performing businesses. If you need a plan for future acquisition, you can always contact Wiley Financial.
Benefits of Business Appraisal
Management Structure
A business appraisal provides a detailed structure across all departments. It improves accountability among the management team as well as employees. Besides, it provides a framework through which the management and employees can meet and discuss performance.
And since employees desire feedback from their seniors, the framework allows the management to offer feedback. It also allows the employees to voice their opinion on the company’s performance.
Strategic Planning
Depending on a company’s size in Dallas, the business appraisal might be bi-annually or annually. It enables the policymakers to plan for the next half-year or year. Besides, it allows them to make performance assessments on the management team, making changes where needed.
Clear Expectations
A business appraisal shows the owner the position of their business. As such, they can develop clear expectations for each department. It enables them to work in harmony to achieve a common goal and discuss the difficulty of meeting the expectations.
Bolsters Employee Morale
Often, companies with clear expectations reward employees who meet their expectations. And since the appraisal report allows the management to develop clear expectations, the employees will be motivated to perform.
What Does a Business Appraisal Report Include?
As mentioned, courts in Dallas will require a business appraisal to continue with certain types of cases. Here are the components of this report.
The Cover Page
The appraiser will introduce themselves and their firm. It also contains the completion date of the inspection.
Transmittal Letter
The section includes the name of the vendor who initiated the appraisal, such as a business. It will also have the assessment’s purpose and who would legally use the document.
Executive Summary
It summarizes some of the key findings during the process. It can have a short asset description and the methods used to reach a value.
Asset Description
It provides the legal identifiers of the asset or property, such as serial numbers, a title deed, and others. It also describes the nature of the investment, such as its quality and performance.
Appraiser Certificate
Here, the appraiser will provide their qualifications. It enables the court, the IRS, or shareholders to cross-reference their legality.
Appendices
It is a supporting document to explain specific terms. It can also contain documentation and calculation used during the process.
What to Consider Before a Business Appraisal
Financial Performance
A business should consider its cash flow and its projected profits. It should also look at its expenditure to date. And what it plans to spend on in the future.
Assets and Liabilities
The company should consider its total assets and liabilities. The difference between the two should indicate their asset value.
Intangible Assets
It includes the company’s customer base, which a potential buyer can seek to use. The strength of the brand can also attract potential buyers. Patents and trademarks are also crucial during the appraisal process.
Staff
The management structure is of great importance to potential buyers. It determines whether they’ll retain it or move on with a new one. When conducting a business appraisal in Dallas, we list all management positions.
Conclusion
There are many things to factor into your business appraisal in Dallas, and we hope this guide was helpful. If you still have questions or need assistance getting a certified appraisal, contact Wiley Financial today.
