Are you wondering “how long does a business valuation take to complete?” Short answer: It depends.
At one point or the other, an entrepreneur may find himself in need of a business valuation. Valuations are the estimates of a business’ worth as assessed and reported by a professional. Business owners typically get valuations for their enterprises when a partner leaves the firm, or when they want to sell their companies or take them public. As with all reports in the business world, this one takes time to conduct and report accurately. However, not all valuations take the same amount to compile. Some businesses may wait longer to get an estimate of how much they’re worth than others after engaging a professional firm. Here we look at why this is.
Factors that Determine the Length of a Business Valuation
Availability of Financial Information
An appraiser needs data on the income, market, and assets of the business to conduct a valuation. He would also need to conduct his meeting of due diligence as part of the report preparation process. Businesses which avail all this information to independent valuation companies receive their statements of worth faster than those that delay. In fact, if an enterprise provides accurate and consistent data to its valuation company, it should receive a statement of value 30-45 days after handing in the documents.
Structure and Size of the Firm
The amount of financial data provided by a multi-tiered multi-national company differs from what a small, two-person company will give an independent valuation firm to conduct the estimation of the business’ value. Additionally, valuation specialists can prepare their reports faster when they are dealing with one form of security as opposed to when they have to assess different securities and capital.
Availability of the Client and Existence of Client Advisors
A business owner who promptly responds to any requests for compliance from a valuator for information makes it easier for the former to do his job, consequently speeding up the valuation process. However, when the client or the appraiser has to consult with advisors before releasing any company information, the process becomes tedious. Examples of client advisors that can slow down the valuation procedure include trustees, executors, and boards of directors.
Number of Adjustments to be made
Businesses with inconsistencies in their financial reports and adjustable expenses (discretion, non-recurring and non-operational) can expect their appraisers to take longer coming up with a valuation. The reason for this is that the valuators in such cases usually have to align the books before estimating the value of the enterprise.
Because of the factors discussed above, a business valuation could take as little as three weeks to complete or could drag on for months. Most valuation firms, however, give the average period for issuing the report as about 3-6 weeks after being engaged. If a firm needs an urgent valuation, however, an exception is made. For a higher fee, these firms can make themselves higher priorities for the firms calculating their values. If all the information is given on time and schedules permit, the valuation could be given in a number of days.
You can get both formal and informal business valuations from our Business Valuers. Choose your preference and speak to us today.
Mathieu Paul
Director – Business Improvement
P: +618 6315 2755
E: enquiries@wabusinessvaluations.com.au
The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
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