Why You Need a Business Appraisal:

Independent Fair Market Value (FMV) appraisals are crucial to achieving equitable and efficient transfers of ownership. Therefore, the Colorado Business Exchange requires a FMV appraisal before listing a business for sale. Moreover, the FMV appraisal affords significant value to our clients.

The FMV appraisal helps you to make an informed decision to sell. Obviously, you need to know what your business is worth in today’s marketplace before you can decide if selling a company is in your best interest. An independent FMV appraisal tells you this quickly, economically, and confidentially. Only after deciding that you would rather have the FMV in cash, than the business, are you ready to begin the arduous process of preparing, listing, marketing, showing, negotiating, and contracting for the sale of your business.

The FMV appraisal helps you to determine an appropriate asking price. Understanding the various valuation methodologies and how they support the appraiser’s conclusion of value is key to establishing an appropriate asking price. Ask too little and leave money on the table. Ask too much and waste a lot of time with buyers who will never pay it. You can be sure that ultimately buyers will only pay a fair price for your business. Keep in mind, negotiations are the only way to arrive at the final value. The asking price simply opens the negotiations.

The FMV appraisal helps you in negotiations. Of course, the appraised value is not the only fair value for a company. Value changes daily, as the business matures, and as buyer and seller motivations change. Since, each transaction is unique, you should expect each negotiation to yield a different, yet fair, value. A FMV appraisal gives you a powerful tool to convince a buyer of the businesses’ true worth. Without an appraisal, the buyers have the negotiating power because, in their mind, they are the only ones objectively valuing the business.

The FMV appraisal gives everyone piece of mind, setting the stage for a smooth transaction. A valuation performed by a recognized, well respected, accredited, and independent appraisal company is the best way to convince a buyer’s accountant, banker, and other advisors that your business is worth what you are asking. Working through the appraisal process prepares owners and their advisors to give appropriate responses for the questions prospective buyers will ask. Typically, when negotiations start with an independent FMV appraisal, they end in a smooth transition with both parties knowing they got a fair deal.

The FMV appraisal may be most valuable if it helps you decide not to sell. You will spend a lot of time and effort in preparing, listing, marketing, showing, and negotiating for the sale of your business. It is not worth going through that process, and risking a breach of confidentiality to customers or employees, just to find out that you are not willing to sell for the price a buyer will pay. Consider too, the emotional strain for you and your family caused by mislaid hope in unrealistic expectations of a sale. Finally, the appraisal provides a wealth of information about your business, what it’s worth and why. It establishes a baseline for future growth and helps you focus on improving those things that add the most value; so, you can build your business to a point where you will sell for a fair price.

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