Have you decided to list your business for sale? Being a business owner when you have decided to sell your business, it is common that you opt for a professional help from a financial advisor.
Additionally, a lot of questions arises when you are planning for equity transfer, making a change in business environment or changing the company's situation. Knowing the details about the valuation dates plays a significant role in the process of selling your business.
In this article, you will get an idea of all the information needed to know related to the business valuation period, how long does the business valuation takes place, What are the factors involved in the business valuation, how long the business valuation is valid for.
How Long Does The Business Valuation Takes Place?
The process of business valuation would approximately takes place with approximately 2 weeks based on the following factors
- Availability of necessary documents - The financial analyst requires the necessary documents for the valuation of the business. The business valuation begins with the comprehensive provision of the necessary documents.
- Size and complexity of business - If there are two or three owners, the business valuation process would take place straightaway. But, if it is a multi-tier business with multiple owners, it would take little more time. The size and the complexity of the business has the direct impact on the business valuation process.
- Accessibility and autonomy of the owner - As soon as the financial analyst begins the work, the accessibility of the owner is significant. For example, if the owner needs the approval of the board directors, trustees or executors, the process may take little while.
As the result, a business valuation can take place with the influence of the owner. Provided the necessary details and the documents, the business valuation can be done. Depending on the consultant or the financial analyst to analyze th e financial data, the time period of the business valuation varies.
How Long Does A Business Valuation Last For?
The valuation of the business is done based on the valuation date. There might be slight changes in the capital structure, market value, revenues, and related values.
Why it is important to determine the best Business Valuation Date?
The valuation of the business is done as of a specific date. The financial analyst valuates the value of the business based on the known information as of that date.
The values of the business fluctuates just as the stock market values.
Does the Purpose of the Valuation Determine the Business Valuation Period?
Understanding the purpose of the valuation of the business plays a significant role. The purpose can be of selling a business to strategic buyer or a partnership buyout.
Based on this the financial analyst determines the methods of business valuation. This is because, few business owners sells an interest of their business on a long term basis as a business succession plan.
Can Different Methods of Valuation determines the Business Valuation Period?
At the same time, the financial analyst considers the following factors while determining the value of the business. When you update your business yearly that would reflect the changes in your company subsequently.
What might change the value within a year?
- Change in revenue or earnings
- Change of control
- New management team
- Loss of a key person
- Legislation changes that impact your industry
- Change in the purpose of the valuation
- Economic or industry changes
Takeaway
Having said that, when there are major changes in your business in the terms of industry, economy, financial, etc., the business valuation gets complicated and needs more updates. If there are changes, then the business valuation that was done earlier may not validates your business value.
If there are only minor changes, the financial analyst uses the up-to-date financial information to determine the value of the business.
