Business Valuations

An economic consulting business valuation can be a complex process undertaken by professionals who understand how to properly assess the financial health and capabilities of an enterprise.

Depending on its size or area of operation, the job could easily fall to an in-house accountant or auditor, a consultant from a financial management firm, or even a registered valuer with appropriate certification. All participants involved should have enough familiarity and analytically sound numerical skills to appraise the company’s fiscal standing accurately.

Furthermore, all their efforts should be conducted ethically, with any unbiased and objective conclusions brought at the forefront of their findings. Ultimately, seeking out experienced experts is key to ensuring businesses have got the necessary assessments delivered to them successfully and productively.

Asset-Based Valuation: The asset-based approach looks at the tangible assets of a business such as cash, inventory, equipment, and real estate holdings. The total value of these assets is then divided by the number of total shares outstanding to calculate the fair market value per share of the company’s stock. This method is best used for companies with few intangible assets such as intellectual property, brand recognition, and customer loyalty. 

Market-Based Valuation: This approach uses industry averages and benchmarks to estimate a company’s worth based on its size, sector, and market trends. This type of valuation takes into consideration such factors as competitive position, product/service offering, financial performance history, and customer satisfaction ratings to determine a fair market value for the company’s stock. This method is most suitable for businesses with established reputations in their industry but may be less reliable for smaller companies or those just starting. 

Income-Based Valuation: The income-based approach evaluates a company based on its current and projected earnings potential over time. It considers factors such as cash flow from operations, expected growth rates over time, estimated future earnings potential from new products or services being launched, etc., to derive an estimate of what investors would be willing to pay for a stake in the company today. This type of valuation tends to be more reliable than others since it provides an objective measure based on actual data and past performance rather than estimates or assumptions about the prospects of the firm.

Forensic Accounting Corp. strives to provide dependable solutions that you can rely on. Our team of experienced business valuation experts can help business owners come up with strategies to maintain sustainable business operations and move forward toward growth and prosperity.

With our flexible approach, we make sure that our clients receive the best results from their investments. Contact us today for further information about our business valuation services – we look forward to finding a solution that works for your business!