• How Much Is A Business Worth?

    The primary concern for our sellers when considering a sale and for most buyers when acquiring a company is the valuation. However, there is no straightforward solution, and the issue becomes even more complex as there may be multiple valid answers. This is due to the fact that business valuation is an art rather than a science, and appraisers' judgment, expertise, and methodology quality heavily influence valuations. Business valuations are subject to various standards of value, which can lead to different values being assigned.

    Fair Market Value


    The fair market value of a property is the price agreed upon by a willing buyer and a willing seller, both of whom are not obligated to buy or sell and possess adequate knowledge of the pertinent information.

    Intrinsic Value


    The stock values that are of interest to investors depend on a range of factors, such as the company's financial performance, market trends, industry outlook, and macroeconomic conditions. Investors typically evaluate a company's revenue, profit margins, earnings per share, and other financial metrics to assess its financial health and growth prospects, which can inform their investment decisions in the stock market. 

    Fair Value


    Legal standards for valuation are commonly employed in divorce cases to determine the value of assets. 

    Investment Value or Strategic Value


    The value of a business to certain buyers may exceed its fair market value.

  • Fair Market Value

    Let's discuss the fair market value for our purposes. This refers to the amount a buyer would be willing to pay for your company if it were sold in an open market. It's important to note that this is a simplified version of the complex valuation practices that experts specialize in for business valuation services. These detailed reports are often used for IRS inquiries, legal proceedings, and complex financing arrangements, and can cost between $10,000 to $30,000. However, for small business sales, a full valuation may not be necessary, and our simplified valuation methods are generally sufficient for determining your listing price and approximating your eventual sale price.


    Three commonly accepted methods for valuing a company are:

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    Asset Approach

    The Asset Approach evaluates a business by subtracting its liabilities from its assets. This approach employs various techniques, such as book value, excess earnings method, and asset accumulation method. Nevertheless, these calculations often hold little relevance to the market value of most active enterprises. Generally speaking, the Asset Approach fails to accurately reflect the value of a thriving business that generates positive earnings.

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    Market Approach

    In simple terms, this method is similar to the real estate comparable approach where businesses of comparable size and industry are sold at similar valuations. The approach employs two main methods - the publicly traded company guideline method and the merger and acquisition company method (using private sale databases). Numerous databases can be researched to identify multiples of gross sales and earnings that can be compared to your business. This approach is often highly dependable and can serve as a robust indicator of value.

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    Income Approach

    The value of your business can be determined by assessing the present value of the income stream it is expected to generate for an investor. This can be accomplished using various complex methods, such as the discounted future earnings method or various capitalization techniques. This approach is a reliable indicator of a business's value, especially when the business generates positive income. These methods rely on projections of future growth and earnings to estimate the business's worth. However, many people prefer to multiply or capitalize historical earnings to arrive at a value because they assume that the buyer will maintain the current income levels, which provide a reasonable indication of future earnings.

  • Multiple of Your Past Earnings

    In simple terms, the value of your business is determined by a multiple of your previous earnings, assuming that the buyer has confidence that your future earnings will remain steady following the acquisition.

    What is the multiple?


    To determine what to multiply, we need to consider which metric is most appropriate for your business. When valuing small businesses with earnings below $1 million, we typically use owner's benefit, which is calculated by adding the net income, depreciation, interest, owner's salary, and fringe benefits. In essence, this reflects the total income available to a single owner if the company had no debt. For larger businesses, EBITDA is typically used, and this metric includes a normalized salary and benefits package for an executive to manage the business.


    The multiples applied to owner benefit can vary significantly, ranging from below one up to three. For larger companies with EBITDA nearing or exceeding one million, multiples can range from four to six. However, it's important to note that these multiples are not set in stone. The appropriate multiple for your business will depend on various factors, including the size, quality, and verifiability of your owner's benefit. If your business has poor financials, a bleak future, negative growth, or minimal profits, it is likely to command a lower multiple. Conversely, if your business has strong financials, a bright future, and robust growth potential, it is more likely to command a higher multiple.


    The ultimate sale price of a business is determined by the buyer, rather than valuation experts. As a result, it's impossible for anyone, including your banker, CPA, lawyer, broker, or even your mother-in-law, to tell you precisely what your business is worth. The only person who can provide an accurate valuation is the buyer who ultimately acquires the business, and even that is a subjective assessment. Different buyers will value the same business differently, meaning that there is no objective measure of a business's worth.

  • Business Valuations Spokane WA

    Are you a business owner in Spokane, WA looking to sell your company or just curious about its current value? If so, you may be wondering how to determine your business's worth. Business valuation is a complex process that requires expertise in finance, accounting, and market analysis. Fortunately, there are experts in Spokane who can help you accurately determine the value of your business.


    A professional business valuation expert in Spokane, WA can provide a comprehensive analysis of your company's financials, assets, and market position. They will use industry-standard methods to determine the value of your business, taking into account various factors such as revenue, profitability, and growth potential. By working with a valuation expert, you can gain a clear understanding of your business's worth and use that information to make informed decisions about its future.


    Business valuations are particularly important if you're considering selling your business. Understanding the true value of your company is crucial when negotiating with potential buyers. A professional valuation can help you set a fair asking price and ensure that you receive the full value of your business.


    In addition to helping you sell your business, a valuation expert can also provide insight into areas where you can improve your company's value. By identifying areas for growth and development, you can increase the value of your business over time and maximize your return on investment.


    At the end of the day, business valuations are an essential tool for any business owner in Spokane, WA. Whether you're looking to sell your company, secure financing, or simply gain a better understanding of your business's worth, a professional valuation can provide you with the insights and information you need to make informed decisions. So why wait? Contact a valuation expert in Spokane today to get started.

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  • Spokane WA

    Spokane, WA, is a vibrant city located in eastern Washington. It is known for its scenic beauty, diverse culture, and outdoor recreation opportunities.


    One of the things that Spokane is known for is its fantastic craft beer scene. The city is home to over 30 breweries, producing a wide variety of delicious beers, from light and refreshing to dark and complex. Visitors can take brewery tours and tastings to experience the best of the local craft beer scene.


    Another thing Spokane is famous for is its outdoor recreation opportunities. The city is surrounded by beautiful parks, trails, and rivers, making it an ideal destination for hiking, biking, fishing, and water sports. Visitors can explore the scenic Spokane River Gorge or take a stroll through Riverfront Park, which hosts several cultural events throughout the year.


    Spokane is also known for its rich cultural heritage, with a thriving arts and music scene. The city hosts several festivals and events celebrating the diverse cultures represented in the region, including the Spokane Tribal Gathering, Spokane International Film Festival, and Spokane Folk Festival.


    As for landmarks, Spokane is home to the iconic Spokane Falls, which cascades through the heart of the city and provides stunning views from several vantage points. Visitors can also marvel at the historic Davenport Hotel, a grand and elegant structure built in 1914, and the Clocktower, which serves as a prominent symbol of the city's vibrant downtown. Another landmark is the Martin Woldson Theater at The Fox, an opulent theater with a rich history of hosting world-class performances.

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