Business valuation methods: why it's needed and how to choose the right one.
How to properly evaluate a business
Fifteen years ago, for many residents of Russia, owning their own business was considered an unattainable dream that only foreign companies could realize. After all, in the early 1990s our country lived by the wild laws of the streets, when any newly created business was levied by racketeers and officials.
Active economic development of the country led to the regulation of the market situation as a whole, which resulted in the emergence of a large number of companies and private entrepreneurs ready to run their own affairs and pay taxes to the state treasury. Registering one’s own business became an everyday matter for many Russians. A key aspect of organizing your own enterprise is the registration process, which is quite a troublesome procedure that takes a great deal of time and money. Any entrepreneur starting a business from scratch encounters this phenomenon. However, you can significantly reduce this time by using the service of purchasing an already established business.
In this case, when deciding to buy an established and already operating business, one should carry out a business valuation, which not only allows you to find out the exact price of the lot being sold, but also protects the future owner from possible fraudulent operations that sometimes accompany certain sale or purchase transactions. It is worth noting that the business valuation procedure requires special attention and seriousness from the buyer. After all, any small detail can lead to the buyer being left without money and without the acquired business.In addition to determining the price of the company being sold, it is necessary to carry out work to evaluate all the firm's assets and securities, for which it is also required to determine the market value at the time of sale. In this regard, business valuation is a procedure for identifying the exact real value of an enterprise considered as a single whole. Only after completing all the actions related to business valuation does the potential owner make a decision to buy the company. You should not perform the procedure of determining the exact market value of a business yourself. Without knowledge of all the subtleties and nuances of valuation activities, it is practically impossible to determine the specific price of the business being sold.