A business valuation or appraisal is the independent and unbiased process of determining a supportable opinion of the value of a business, business ownership interest, security or intangible asset as of a specified date. Valuations can be performed for a number of reasons, and can come in a variety of formats. As a part of Murphy Business, we have access to one of the the largest business appraisal companies in North America, Murphy Valuation Services Inc.
All Murphy company valuations are performed by qualified, professional appraisers experienced in all aspects of business valuation and business transfers. Our valuations are performed in compliance with the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation (USPAP) as well as the Business Appraisal Standards of the Institute of Business Appraisers. Compliance with industry standards ensures that proven peer-reviewed valuation methods are used to develop defensible opinions of value. Through participation in teleconferences and annual valuation conferences, Murphy appraisers stay abreast of developing valuation issues and related court cases.
Why should you perform a business valuation?
Sooner or later, every business owner will need a reliable company valuation for one or more of a variety of reasons, including:
- Selling the business
- Creating a shareholder agreement
- Resolving shareholder disputes
- Employee Share Ownership Plans (ESOPs)
- Estate planning
- Insurance claims
- Gift taxes
- Mergers and acquisitions
- Partnership buy-outs
Ultimately, for many entrepreneurs, your business is your single most valuable asset. Shouldn’t you know what it’s worth? If this was an investment portfolio, you would be regularly monitoring its value and making investment decisions based on this information. Having a professional valuation can allow a business owner to make calculated and educated decisions that can significantly impact both the short and long-term value of the business.
When obtaining a business valuation, there are four formats for appraisal reports that we offer. They are:
Broker’s Opinion of Value – The Broker’s Opinion of ValueTM (BOV) Report is a small business pricing report. The BOV report is used by buyers, sellers and business brokers, etc. to determine reasonable selling / listing prices for small companies.
Calculation of Value Report – A Calculation Engagement occurs when the client and the appraiser agree to specific valuation approaches, methods, and the extent of selected procedures with minimal if any research into the history and nature of the subject business, industry trends and outlook, the economic outlook, financial benchmarks, etc. The Calculation of Value Report presents a Calculated Value.
Business Valuation Report – A formal summary report that is used primarily for non-litigation situations. This restricted-use abbreviated report is typically all that is needed for determining the selling price of a business or assisting in establishing a buy-sell agreement between partners/shareholders.
Business Appraisal Report – This formal comprehensive report is suitable for litigation support and review by third parties such as the CRA. The report explains in a step-by-step manner what was done and how the value was derived.