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Are you considering valuing your business? It’s essential to have a structured approach to ensure accuracy and completeness throughout the valuation process. A comprehensive business valuation checklist can ensure that no important factors are overlooked during the valuation process. Whether you are valuing your business for legal purposes, asset redistribution, boosting its value, buying it, or selling it, the following checklist can serve as a valuable guide.

  1. Know The Purpose Of Valuation: Understanding the purpose of valuing your business is essential. Identify whether the valuation is needed for legal reasons, asset redistribution, enhancing value, acquisition, or sale.
  2. Collect Financial Information: Gather the last three years of financial information, including tax returns, profit and loss statements, balance sheets, depreciation statements, management accounts, budget and performance data, as well as any profit or cash flow projections.
  3. Asset Information: Compile details of major assets used in the business, including any valuations and relevant maintenance or lease agreements.
  4. Collect Market Information: Determine the market your business operates in and assess its growth potential. Identify competitors, barriers to entry, customer types, suppliers, and your market share.
  5. Collect Other Commercial Information: Take note of any licensing or regulatory requirements specific to your business. Additionally, gather details of any contingent liabilities, such as legal disputes or guarantees.
  6. Analyze The Information Collected: Consider factors that impact the value of your business, including profit margin, stability of earnings, and types of income streams.
  7. Staff: Compile a roster of staff, including their hours, skills, wages, bonuses, and any key personnel. Gather copies of staff contracts.
  8. Systems: Document operational procedures, training manuals, and details of software and sales systems used in your business.
  9. Intellectual Property: Make a list of intellectual property assets, including copyrights, trademarks, patents, designs, and other proprietary information.
  10. Suppliers: Note any supplier contracts or special arrangements that impact your business operations.
  11. Clients: Analyze your client base, noting the size of major clients and the percentage of sales they represent.
  12. Franchise: If your business is a franchise, ensure that franchise agreements and disclosure documents are up-to-date, and monitor renewal processes.
  13. Products and Services: Create a comprehensive list of the products and services your business offers, highlighting what sets you apart and your pricing policy.
  14. Information Technology: Compile a list of IT assets, including software and cloud-based services utilized by your business.
  15. Competition: Identify your major competitors and highlight the differences between the services and products you provide.
  16. Other Information: Consider additional factors that may impact the value of your business, such as required management and staff skills, the quality of management, industry lifecycle, and reliance on owner-operators.
  17. Select Appropriate Valuation Method: Once all the necessary information is collected, choose an appropriate valuation method, such as asset valuation, market valuation, rule of thumb, discounted cash flow, or future maintainable earning method.

By following this comprehensive checklist, you can ensure a thorough business valuation process. For further information on business valuation methods or how to best value your business contact us.

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