BUSINESS VALUATION CHECKLIST – WHAT YOU NEED TO KNOW
When you’ve decided to define your business’s value, you’ll need to do some prep work. While getting your business evaluated can feel stressful by itself, it will help your business reach its full potential. The analysis a business valuation provides can help you plan for your business. Whether you are looking to sell your business or gain insights to help it grow, you’ll be glad you decided to get a business valuation. It may look like a daunting task, but like all assessments, a business valuation will go better if you get everything in order beforehand. Preparing for your valuation will require you to get a lot of paperwork and information readily available. Here is what you need to prepare before your business valuation.
When preparing for your business valuation, you’ll need to put together all of the basics of your business. For example, you’ll need to get together the name and address of your business as well as the contact person’s email address. For your valuation, you’ll need to find your North American Industry Classification System Code. You can find your industry’s code online if you don’t already know. If you are leasing your business space, you’ll need the terms of your lease, such as the monthly rent and square footage. You’ll also need the land and building information such as the market value and the outstanding mortgage for the property. If anyone outside or inside your company has been focusing on the company finances, make sure you have their contact information. The analysts will need them to accurately determine your business’s value.
The bulk of what is needed for your business valuation are financial documents. You’ll need financial data from your tax returns and the last three years of your business’s federal tax returns. You’ll need current interim financial statements like your income statement and balance sheet. Prepare your cash flow forecast in regards to your revenue growth and EBITA margin. You’ll need to prepare a sales by customer report and determine the 3-Firm Concentration Ratio. Get a summary of your current insurance coverage like life insurance and liability insurance. You’ll also need to put together your compensation schedule for your employees and the owner. That includes their W-2 forms and 1099 amounts. If you have any, you’ll need to compile your miscellaneous expenses. Get together all of your one time and non-recurring payments, your non-operating revenues, expenses, and gains and losses.
While getting a business valuation can be stressful, it will be easier if you prepare. Getting all of your important documents and financial data ready will make the process far easier for you.