Month: October 2019

5 Major Types of Business Valuation Methods

Business Valuation Methods

There are many kinds of methods out there when it comes to business valuation. Some methods will work for you and some may not. However, it’s still important to know about all these different types of methods.

If you’re looking for business valuation services New Jersey, then look no further. ThomasRoss Financial Group is here at your service.

That being said, let’s first understand why business valuation is important.

Why is Business Valuation Essential?

When in the world of corporate and business, one always needs to prepare for all different circumstances and scenarios as the market is extremely unpredictable. In case your company or business is being sold, liquidated, or bought, you need to be aware of the current market value and need to be able to provide the documents and statements that prove the actual worth of your business. Hence why, you need business valuation. If you need business valuation services New Jersey, then you’ve come to the right place. At ThomasRoss Financial Group, you can avail services from extremely qualified business and financial analysts.

A valuation professional usually uses the market analysis, cash flow model, and financial statements to determine the value of a company or a business. If you’re selling your company, then you need to ensure that you get your company valued as a strategic buyer will definitely want to see the worth of your company before they invest their money. However, stay prepared for the fact that they may wish to perform valuation themselves and compare the result with the value you provided them.

Now that you understand the importance of getting your company valued, let’s move on to understanding the 7 business valuation methods:

1. Market Value Business Valuation Method

The market value business valuation method is one of the most effective approaches to business valuation. With the help of this, one can most likely get a near accurate value of a company. In this approach, our business analysts compare your business to businesses that have already been sold and once belonged in your industry. Needless to say, this approach only works after our financial analysts collect enough market data of your competitors. However, if you choose to do this on your own, then be aware that this will prove to be extremely difficult. Hence why, it’s recommended that you hire professionals for the task of valuing your company, as it’s highly unlikely that you’d have a public database.

This valuation method is a great way to find out the actual worth and value of your company. However, it’s always good sense to try other options when dealing with anything. It never hurts to get a second opinion.

2. Asset-based Business Valuation Methods

Now, we’re going to discuss the asset-based business valuations methods. You probably gathered from the name, these methods revolve around the business’s total net asset value of your company, without the value of its total liabilities, as per your balance sheet.

There are two main ways through which one can approach the asset-based business valuation methods:

Going Concern

Organizations that plan to stay in business and not be liquidated, and have their assets sold off immediately, should opt for the going-concern approach for an asset-based business valuation. This method considers the assets of a company without the liabilities, or business’s current total equity.

Liquidation Value

Whereas, the liquidation value asset-based approach to valuation is opted for only when it’s assumed that the company no longer is in business and its assets are to be liquidated. If the company is finished and its assets are to be sold, only then is the net value determined. However, the important thing to note here is that the worth of the assets is most likely going to be quite low, since the liquidations value typically is a lot lesser than the current market.

3. ROI-based Business Valuation Method

The ROI-based business valuation method is very useful as it can be used in many ways to determine the profit value of your company. For example, you can calculate the capital equipment investment, performance of your pricing policy, inventory investment, etc.

Here, we have mentioned some other methods through which you ROI to determine the value of your business:

. One can calculate the rate of earnings on stock equity and proprietary equity by dividing the net income from the total capital plus reserves.

. One can devise the rate of earnings on invested capital by dividing the net income and income taxes from the proprietary fixed and equity liabilities.

. One can calculate the rate of earnings of total capital employed by dividing taxes, interest, net income, from the total liabilities.

4. Discounted Cash Flow (DCF)-Based Business Valuation Method

Discounted cash flow-based business valuation method is also called the income approach. It determines the worth of a company by considering its projected cash flow. The cash flow, discounted or not, needs to be adjusted its current value.

5. Capitalization of Earnings-Based Business Valuation Method

Capitalization of earnings-based business valuation method measures calculates a company’s future profitability by considering its expected value, annual ROI, cash flow.

Need further assistance? Contact us today.

How to Value a Business During Divorce

Business Valuation

When you’re going through a divorce, it becomes impossible for you and your spouse to come to a mutual agreement on any matter. It is emotionally and financially stressful. On top of that, your wife is busy calculating your assets and wants an equal part of it! Again, if you have a business then the court assigns a value to your assets and business and divides the same accordingly.

How to deal with such financial stress at this crucial moment of life? Approach the financial professionals at ThomasRoss Financial Group for business valuation services New Jersey. 

Our business valuation services New Jersey helps you in identifying the value of your business and with the help of appropriate business valuation methods, assets and business are divided among you and your spouse. 

Has your wife appointed the best divorce lawyer? Then, he has probably sent you property claim papers on behalf of your wife. Will you just accept the claims and give up all your hard-earned money? Absolutely no. At ThomasRoss Financial Group, consultants on business valuation service New Jersey is here to help you out with suggestions. 

These pieces of advice may save you from losing all your money.

Equal division of all properties

When you are getting separated, all your properties get equally divided among you and your spouse. Majority countries follow the equitable distribution method in case you have a joint asset with your spouse. 

Both of you get 50/50 of the property. This sounds easy, isn’t it? Both of you along with your respective lawyers can sort out the matter. 

Property valuation becomes difficult when it’s a business property. Even if your wife is not engaged in the business, however, she is supposed to receive a part of the property. Now how to split the same? 

Our business valuation services New Jersey will help you with this matter. They will first calculate the value of your business property and then you both can mutually decide. You both can either sell the property or divide it equally or one spouse can purchase the share of the other spouse in case there is mutual disagreement. 

Valuation of your business assets and liabilities

First, separate your marital assets from your personal assets. For tangible assets, the court checks the market value and depreciation and finds the correct value of the asset. Now you both need to decide. Who wants the office furniture or the vehicle? Sell them and divide the amount between both. 

Now if you had a patent on your name, then be assured that it’s exclusively yours and it does not come under business asset valuation. So, your wife has no share in it. To get accurate valuation of your business assets and liabilities, contact financial evaluators at ThomasRoss Financial Group.

Calculate your business income and profits

Just as your spouse has a share in business income and assets, the individual is also required to share the business loss as well. At ThomasRoss Financial Group, our team of financial consultants focus on valuing your business profits, incomes and losses until the nearest possible date of divorce. 

Now you have the updated valuation with you. Any increase in profit level, any probability of future income or any kind of debt – you know it all and inform the same to your spouse. Everything gets divided equally.

Best method for business valuation

Any financial consultant you approach uses two common types of business valuation methods namely the book value and the market value method. To divide your business assets, the consultant will calculate the value of the asset from the financial statements. 

If your wife is claiming the car instead of property, then you are at a profit. You know why? Because as per book value due to depreciation car’s value decreases and property value tends to increase. 

At ThomasRoss Financial Group, we use market valuation system and we provide the value of your business from the viewpoint of an outsider.

Approximate time taken to close business valuation

It may seem emotional to fix the actual date of your divorce, but if you look at it from the financial viewpoint, then it is extremely important. Your divorce case may go on for years. Then whatever valuation you had done in the past won’t match with the valuation on the date of divorce. It is already a complex process. Please don’t make it more complex by not able to fix the date. 

At ThomasRoss Financial Group, our consultants start proceeding with your business valuation only after you can give a fixed date of divorce. Be assured that you are getting the nearest accurate figure matching to the date of your divorce. 

Hope this blog has been informational for you. For any business valuation-related issues, call us at ThomasRoss Financial Group, our consultants are ready to help you 24/7.