When considering selling your business, a business valuation helps you better understand the realistic value of your company and confirms whether selling would enable you to achieve your financial goals in advance. A professional business valuation provides you with an accurate tool that enables you to make an informed decision about the viability and timing of selling your business.
At Sun Business Valuations, we understand that selling your business is one of the most important financial decisions you'll ever make. Learn how Sun’s personalized approach sets us apart—delivering not just a valuation number, but the insights you need to move forward with confidence.
Roadmap for Building Value
An additional benefit of a professional business valuation is that even if you determine that it is not the right time to sell your business, it will provide you with a roadmap of what you need to do to increase the value of your business for a future sale.
In conducting a business valuation, Sun identifies the key value drivers that increase value as well as the operational risk factors that detract from value. Knowledge of these risks will enable you to take action to improve and mitigate these factors. This advanced planning and focus significantly improvesmarketability, positioning the company to achieve a more favorable valuation when the time is right to sell.
The most important value drivers include strong financial performance with consistent cash flow, a diversified customer base with long-term relationships, and established systems and processes that don't rely solely on you as the owner. Additionally, having an experienced management team or clear succession plan, proprietary products or services that create competitive advantages, and a strong market position within your industry all contribute significantly to your business value.
Risk factors that can negatively impact value often include a heavy reliance on the owner for day-to-day operations, customer concentration where too much revenue comes from too few customers, outdated systems or a lack of documented processes, industry-specific risks or regulatory challenges, and aging equipment or facilities that require significant investment. Understanding these factors early allows you to address them strategically before bringing your business to market.
Long-term affiliation with Sun Mergers & Acquisitions
Sun Business Valuations, LLC was affiliated with Sun Mergers & Acquisitions, LLC for over 25 years. Sun Mergers & Acquisitions specialized in the sale and merger of privately held small and mid-market companies. This business sale and acquisition experience provides Sun Business Valuations with added credibility, a unique insight into current market conditions, transactional “market value,” and up-to-date comparable industry transactions.
This transactional background enables us to provide you with business valuation feedback based upon a real market understanding involving similar privately held companies. We understand what buyers are looking for, how they value businesses, and the factors that most influence final sale prices. This real-world perspective ensures that our valuations reflect not only theoretical value but also practical market realities that you'll encounter during the actual sale process.
Normalizing Adjustments: Presenting Your Business Accurately
Sun Business Valuations will collaborate closely with you to analyze the financial statements, which are typically prepared for tax reporting purposes, rather than for business valuation or sale purposes. We will work closely with you to normalize or adjust the "benefit stream" in order to more accurately assess full value and represent the value of the business to a third-party buyer.
These adjustments are necessary to present a fair and complete view of the business. Common adjustments include owner compensation that needs to be adjusted to market-rate management compensation, personal expenses that wouldn't continue under new ownership, one-time expenses that represent unusual or non-recurring costs, family member salaries that may need normalization, and related party transactions that should be adjusted for non-arm's length arrangements.
We will also work with you to gain a comprehensive understanding of the operational and non-financial factors that impact business valuation, including customer relationships, competitive position, and growth opportunities. This comprehensive approach ensures that the valuation captures the full picture of your business value.
Our Comprehensive Valuation Approach
Unlike many firms that tend to take a templated, "cookie-cutter" approach, Sun customizes each valuation to specifically address its purpose and to account for the unique aspects of each company and industry. All relevant valuation approaches and methodologies are considered when selecting the most suitable one for your specific situation.
We routinely use multiple valuation methodologies in our reports, typically considering four to six alternate approaches that provide a thorough analysis from different perspectives on your business value. These include income approaches that focus on your business's earning capacity, market approaches that compare your business to similar companies that have been sold, and asset approaches, which are applicable to your business type and situation. Most reports consider and include these multiple methodologies, providing detailed explanations of the results of each selected valuation method.
Sun Business Valuations generally employs a market comparable valuation methodology, in which we license 3 databases that include over 6,000 completed privately held company transactions. This enables us to identify similar companies to our client’s companies and benchmark the actual valuation of those companies, relative to sales and earnings, and apply these to the metrics of our client companies.
Our extensive experience helps us navigate these different approaches effectively. Sun Business Valuations has been servicing the valuation community for over 20 years, and we have performed thousands of business valuations in a wide array of industries, tailored to the specific valuation purpose. This experience enables us to quickly understand the factors that drive value in your specific industry and apply the most relevant methodologies tailored to your circumstances.
Working Collaboratively with Your Professional Team
We understand that business valuations are often part of a larger strategic process, which is why we work closely with your existing professional advisors, including your CPA firm, attorney, financial planner, and M&A professional, to ensure our valuation supports your overall objectives. Our clients frequently request that we meet with their associated professionals to review the valuation report upon completion. These detailed post-valuation reviews facilitate a comprehensive understanding of the report, ensuring that the purpose for requiring a business valuation has been addressed.
Throughout the engagement, we explain our methodology and assumptions in straightforward language, remain available to answer questions, and can provide additional analysis if needed for your specific situation. This collaborative approach ensures that everyone involved understands the valuation conclusions.
Understanding the Business Sale Process
When preparing for a business sale, the valuation serves multiple important purposes beyond simply establishing a price. A pre-sale valuation helps you understand realistic market value based on current conditions, identify specific areas where improvements could increase value, set appropriate asking prices that attract serious buyers while maximizing your return, and confidently prepare our clients for the questions and due diligence that buyers will conduct.
The valuation also helps you determine timing. Sometimes the analysis reveals that waiting and making certain improvements could significantly increase your sale proceeds. Other times, it confirms that current market conditions and your business performance align well for an immediate sale. This strategic insight is invaluable for making the right decision for your particular circumstances.
Frequently Asked Questions
About the Valuation Process
About Business Sales and Market Considerations
Ready To Discuss Your Business Valuation Needs?
To discuss your situation and receive information about the business valuation process, timeframe, and cost, please call Stephen Goldberg, Managing Partner, at 800.232.0180 or complete this form.
Sun Business Valuations provides professional business valuation services throughout the United States. Our valuation professionals, including certified valuation analysts and experts with decades in the field, are ready to assist with your business appraisal needs.