Business Valuation Services in Orange County
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To carry out a professional business valuation in Orange County there are many evaluators with Wiley Financial being among them. As a go-to evaluator in the county, we can help you know the exact value of your business, so you do not sell it at a loss.
What is Business Valuation?
Business valuation is the process of gauging a business or company’s economic value. It is important especially when a company wants to merge with another company, sell all or part of its business and close the business among other situations.
To do this, businesses consult certified evaluators to determine the fair value of the company. Wiley Financial is among the certified business valuation companies you can find in Orange County. We help you with business valuation while observing the stipulated regulations.
It can include the analysis of your company’s market value or prospects for future earnings. As you would expect, there are different approaches that evaluators use. Among the common ones are market and asset approaches.
Methods of Business Valuation
To carry out a business valuation in Orange County, evaluators use methods such as;
Liquidation Value
This is the net cash a company or business would receive should it be liquidated and liabilities paid. The value of liquidation is the value of inventory, real estate, equipment and fixtures that a company owns. However, intangible assets such as goodwill and intellectual property are not included.
Book Value
Book value is a company’s net asset value, which is the difference between total assets and intangible assets. It shows how much shareholders of the company would receive if it was liquidated today.
That being said, book value is lower than the market value of a company or asset. Business evaluators in Orange County will use book value to know whether the stock of the company is over or underpriced.
Earnings Multiplier
Earnings multiplier shows a company’s stock price by computing its earnings per share of stock. It is also known as the price-to-earnings (P/E) ratio. It helps investors gauge how expensive the current price of a stock price is.
Discounted Cash Flow (DCF
Similar to earnings multiplier, this method uses future cash flow projects, to gauge the company’s current market value. While earning multiplier does not consider inflation, DCF uses inflation to calculate the value of the company.
If the DCF of a company in Orange County is larger than the cost of investment, there are higher chances of positive returns and vice versa. While a common method, its reliability is lacking since it uses future cash flow estimates, which are unreliable.
Market Capitalization
This is arguably the most common and simplest approach to business valuation in Orange County. It is the share price of a company multiplied by all shares outstanding.
This allows evaluators to divide companies into large-cap, mid-cap, and small-cap. A large-cap company is worth $10 billion or more, a medium-cap company will have a valuation of between $2 billion and $10 billion. Small-cap companies are worth $300 million to $2 billion.
Times Revenue Method
Finally, the times revenue method determines a company’s maximum value by using numerous current revenues. This depends on the local economic environment and industry. As such, the multiple will differ from company to company.
Why You Need Business Valuation
While there are many reasons to perform a business valuation in Orange County, here are the most common:
Litigation Purposes
During legal proceedings where the value of your business is a key factor, business valuation allows you to raise your arguments based on the actual value of the business.
For example, in a case of injury, the damages will be paid based on the fair value of your company. In addition, divorce cases also use business valuation to split the business between parties.
Buying or Merging with a Business
While a buyer or a seller can have different opinions on the value of a business, both parties are willing to sell or buy at a specific price. To make this process easier, an evaluator will use business valuation to come up with an exact figure.
Some of the conditions they might look at include income and market conditions. Wiley Financial is that business appraiser that will ensure you buy a business at its fair value.
Selling a Business
Again, you should ensure you are getting the right bargain when selling your business. While you should set an attractive asking price, ensure you are not leaving money on the table. This means you need the business valuation services from Wiley Financial.
To Have a Profitable Exit Plan
Selling Business Shares
Business valuation also helps you know the price of shares of your company. As such, you won’t sell them at a loss, but rather at a profit.
When Seeking Funding
Another reason to perform business valuation is to attract the right investors. With the actual value of your company, a bank or a potential investor will gauge how much they can invest and whether it is profitable.
You can contact Wiley Financial for professional business valuation in Orange County so we can bolster your credibility.
Business Valuation vs Appraisal
While both are used to determine the fair value of a business, business appraisal in Orange County cannot be used for legal matters since it lacks legal standing.
What is Business Appraisal?
Like business valuation, it is the process of evaluating the value of a business against certain standards. It is carried out when one wants to sell a business or for taxation requirements.
Some of the aspects an appraiser will consider include website traffic, loans, liabilities, client database, and others. If you want a business appraisal, Orange County requires you to consult a certified appraiser.
Luckily, Wiley Financial is a certified appraiser in Orange County. You can trust us to give the actual value of your business so you can sell it at the right price.
Other reasons to perform business appraisal include:
To Solve Disputes
A business appraisal can help solve disputes among shareholders. This is especially critical when shareholders are arguing about the control of the business. As such, an appraiser will evaluate the business, facilitating a seamless buy-out.
Planning a Will
Another reason for a business appraisal in Orange County is to get the actual value of a business or company to divide it equally among beneficiaries.
Taking Insurance Against a Business Asset
To get you a policy value of an asset, insurance companies need to know its value. And this is where the business appraisal comes into play.
Business Appraisal Approaches
To perform a business appraisal, Orange County allows you to use the following approaches:
Income Approach
This approach uses the company’s ability to generate income in the future. An appraiser will divide the net operating income with a business capitalization rate. While a popular appraisal approach, it uses future assumptions, increasing the risk factor.
Market Approach
The market approach compares the value of your business to others in Orange County. As such, it can help a person know how much it would cost them to establish a similar business. This approach is common when evaluating public companies since data on peer companies is available publicly.
An appraiser will use data on recent business sale transactions to come up with pricing multiples. Some of the methods they use include mergers and acquisitions.
Cost Approach
Also known as the asset-based approach, it sums up the liabilities and assets of a business, coming up with the fair value of net assets. It is a crucial approach when evaluating asset-intensive and holding companies.
These approaches are also used in business valuation. If you want professional appraisal and business valuation Orange County, feel free to contact us today.
