Most common challenges facing business valuation professionals
The process of valuing a business combines both art and science and can be arduous. Generally speaking, a detailed, comprehensive analysis and the ability to develop accurate projections and assumptions are necessities. Business valuation also requires the application of finance theory in the appropriate places and using professional judgment.
With that said, some of the most common challenges facing business valuation professionals include:
• Developing reasonable assumptions for projections based on historical trends and expected future occurrences and documenting the reasoning behind those assumption choices
• Requesting, tracking and reviewing the necessary documents
• Spreading the tax returns and financial statements
• Finding robust private-company industry data against which to benchmark the subject entity
• Gathering the appropriate market comparables (both public and private) and documenting the reasoning behind the market comparable choices
• Calculating a discount rate that appropriately reflects the risk inherent in the subject entity and documenting the reasons for using (or not using) the methods used for calculating the WACC • Building a comprehensive valuation report
• Building a comprehensive valuation report
• Remaining compliant with SSVS No. 1 (especially for CPAs), USPAP, IRS guidelines and other industry standards
For most professionals the real challenge comes in compiling a robust, fundamentally sound valuation report. The written report is often the only tangible product delivered to the client and typically serves as the cornerstone of professional credibility. Software like Sageworks Valuation Solution offers a streamlined business valuation workflow, but more importantly provides a unified system to create and compile valuation reports. Leveraging the right technology will greatly reduce the burden of comprehensive reporting, with a user friendly progression and fully integrated, intuitive report template builder Sageworks Valuation Solution tops the list.
If you would like to find out more information about overcoming these challenges, read our whitepaper on Business Valuations: Challenges and Opportunities.
Sageworks Valuation Solution
Sageworks Valuation Solution is a web-based, business valuation solution that helps firms streamline workflow, scale existing processes and increase realization rates. Explore features and benefits by watching a one-minute walkthrough video.