Jason LeRoy, ASA, CVA, CFE – Shareholder, Valuation and Litigation Support Group

Q.  I’m looking to sell or transfer my business interest as part of my succession plan and would like to know what it’s worth.  What is the process for valuing my business?

The first step is to select a qualified business appraiser. Ideally, you want to hire someone who prepares business valuations full-time as opposed to someone who “dabbles” part-time. The appraiser should hold a valuation credential, such as an Accredited Senior Appraiser (ASA), Certified Valuation Analyst (CVA) or Accredited Business Valuation (ABV) certification.

Next, determine the type of report that is needed. These reporting options include a detailed, summary, calculation or oral report.  The business appraiser can help you understand which report fits your needs and budget. If you’re interviewing several appraisers, make sure they are providing proposals for the same type of report, so you’re comparing apples to apples.

Once an appraiser is selected, they will provide a list of specific information needed, such as historical financial statements, operating agreements, asset listing, etc. This information, as along with industry and market research, will be used to prepare preliminary calculations.

The appraiser will then meet with the owner to discuss the business, including the history, operations, projections and financials. This meeting may last an hour or more and is conducted on-site, when possible.

Finally, the appraiser will provide a draft report for review. Once any necessary revisions are made, the report will be issued as final. The entire valuation process typically takes two to four weeks.

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Jason LeRoy  is a Shareholder in Doeren Mayhew’s Valuation and Litigation Group in Michigan and can be reached at 248.244.3000. For more information on valuing your business, contact our valuation and litigation support specialists.