Business owners considering a sale need to first get their business valued. Did you know that one survey performed in 2022 by M&T Bank found that 98% of small businesses didn’t know the value of their companies? Regardless of whether you plan to optimize your business further, sell it when you retire, or pass it to a family member, understanding the value of the business you run is foundational.

It could be tempting to rely on an estimate. Estimates are a good starting point and are better than nothing, but receiving a certified business valuation grants some powerful advantages. Here are some clear benefits that you get when receiving a certified business valuation from an accredited analyst.

Accuracy and Credibility

Certified business valuations are conducted by trained professionals who have received a Certified Valuation Analyst (CVA) or Accredited in Business Valuation (ABV) credential. They use standardized methods and rigorous processes to assess value, providing a more accurate and credible figure compared to informal estimates. Mere estimates of value don’t require the same rigor, nor the deep analysis necessary for financing and other legal aspects of a business sale.

Certified valuations are comprehensive and open up new opportunities

Certified business valuations entail taking a close look at all of the key factors of your business such as the total assets and liabilities held by the business, cash flow, and market potential. Once an analyst has taken a deep look at your business operations and finances, you will likely discover new ways to increase efficiency, cut costs, and boost the overall value of your business. You may also find that your business is worth more than you thought, whether it be through long-standing contracts with clients or other underlooked sources of value.

Estimations can provide you with a general idea of where you stand, but they cannot give you a full picture of what to improve if you are looking to grow.

Certified valuations help inform exit strategies

Being able to pin down the value of your business allows you to plan ahead for the future and calibrate your exit strategy to what you can expect to take home from a sale. Underestimating the value of your business leads to lost opportunities. On the other hand, overestimating the value can cause you to make poor decisions now and in the future. Ultimately, receiving a concrete certified valuation directly leads to an informed exit strategy and peace of mind.

If you are considering passing your business to a family member, everyone involved will need to plan ahead for how to finance the sale appropriately. Valuations also serve as a good time for you to evaluate your business trajectory with partners.

70% of family businesses fail to survive to the second generation due to their lack of succession planning. If you are a family business owner, getting a certified business valuation is a strong first step towards securing your business’s future and legacy.

Valuations open up financing opportunities

Your chances of securing financing as a seller is greatly improved once you receive the valuation, as it provides an accurate picture of the business’s financial health to lenders and investors. Lenders need to evaluate your ability to pay off the financing they provide, while investors will need to understand the strength of their potential investment. 

Stronger position in negotiating the sale

Having a certified valuation also gives you a solid foundation for sale negotiations, boosting your ultimate sale price. The buyer will also understand that your operational and financial data is backed up by an outside professional’s analysis, giving them more confidence in their role as a new owner.

Receive your own certified business valuation from Bridge

Do you think it’s time to get your own certified business valuation? Bridge Financial provides a number of free services for business owners, such as business valuation estimates, business health scores, and seller readiness evaluations. Throughout the process of valuation, we can also alert you to:

• Opportunities to optimize your business’s operations, boosting revenues and value
• Factors that reduce your business’s value, and ways to address them
• New strategies you haven’t yet utilized, like marketing techniques or tech platforms, that can take your business to the next level
• Whether you’re ready to sell, and what it will take to get there

If you’re ready to take the leap and get on track for sale, we offer accredited business valuations as a part of our comprehensive slate of services.

Get in touch for a free consultation with a Bridge advisor and learn more about your business’s potential.