Top 10 Reasons Business Owners Need a Business Appraiser & a Business Intermediary: Financial Analysis and Fairness Opinions

It is not uncommon for the business owner pursuing a sale of the business to require additional financial analysis services from a business appraiser during the sale process. This financial analysis may involve updates to the original valuation based on changing circumstances after the initial report, analysis relative to potential synergies and the impact on value to a strategic buyer, industry analysis and/or research, financial modeling, fairness opinions as to offers and the structure of an offer, or financial analysis for use in supporting a counter offer to a prospective buyer. This additional analysis is beneficial to the business broker and business owners in supporting their negotiating position. In addition, the independent nature of the analysis and valuation from the business appraiser, who has a familiarity with the company, is helpful in raising the confidence of the prospective buyer, who may be reluctant to accept the claims from just the business broker and the owners.

Consequently, the financial analysis services offered by a business appraiser are useful in negotiations in situations where an initial valuation was not performed. In addition, the prospective buyer and sellers may agree to utilize the services of the independent business appraiser to be the final arbiter of disputes arising during negotiations. This allows both sides to remain amicable when negotiations become tense. Should the buyer acquire a majority interest with the owners retaining a minority interest until a future buyout, on-going analysis and valuations by the independent appraiser are crucial in ensuring a positive goodwill between the parties moving forward.

Conclusion

The process of selling a small business is often more complex than business owners realize. From the decision to sell the company to closing the transaction, the path is often fraught with potential pitfalls that may derail the deal or create unnecessary and unwanted disruptions, which only serve to place additional stress on the company’s owners. From the previous discussion, business owners should be able to recognize the need for a professional business broker and business appraiser in order to successfully achieve the desired results of the sale of the business.

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