Business Valuation Software will quickly value a business and provide an optimistic to pessimistic valution range.
Business Valuation Software builds a business forecast and then applies this forecast to generate a Business Valuation. The forecast is built by considering future changes in the macro and micro business environment and the impact on current business performance. From this basic data future revenue and costs are determined. Sensitivity Analysis (Optimistic, Expect and Pessimistic) can be applied to the generated forecast allowing a range of scenarios to be easily tested.
This forecast provides a high level strategic budget overview, assists in the identification of business opportunities and risks, delivers a quantifiable framework for business development strategies and actions and is the basis of the business valuation. The valuation methodology considers Owners Earning Power and the Required Return on Investment to develop a Business Valuation that reflects the potential to value add and considers the future business environment. This valuation provides strong support for business purchase, sale or financing negotiations. Outputs include up to a 10 year Forecast, Sensitivity Analysis, Investment Return, Net Present Value Analysis, and calculated Business Valuation (Expected, Optimistic and Pessimistic).
Determining the value of a business is required for buying, selling, establishing or financing a business. From an investment perspective a business is simply an asset the value of which is determined by its future returns (profits).
What is a Business Valuation
A Business Valuation is a calculation of the value of a business. This value is effectively the price a business could sell for or the maximum amount of capital that should be expended in setting up a business.
Benefits of a Business Valuation
A justifiable Business Valuation is the key negotiating tool when buying or selling a business. Without this there is no compelling logic behind the investment.
Using a business forecast that considers the dynamic environment in which the business operates and the potential for developing future opportunities is the basis of a verifiable business valuation. Applying Sensitivity Analysis allows a range of scenarios and corresponding valuations to be analyzed.
In essence a business valuation is the maximum amount of money that can be invested in a business while ensuring the required return on investment is achieved.
Determining a Business Valuation
Business Valuation methods include Industry Multiples (ie revenue times a multiple), past market prices, asset based valuations, and a range of return on investment approaches.
When considering the business return (profit) as an income stream from an investment (the amount invested in the business) the Return on Investment approach is most suited and widely applied. This approach considers the specific business performance. Using the Return on Investment approach requires a business forecast to determine future business returns. If this forecast applies market knowledge and allows business potential to be quantified a solid basis for valuation is provided.