What is a business appraisal?

An appraisal gives a focused view of the true value of a company. This value depends on how much benefit you receive compared to the risks involved. Commercial relationships, current contracts, and market conditions are also evaluated. Companies are valued based on their "profitability" and "risk". For a complete business appraisal, it is necessary to have an exhaustive review of the historical financial, administrative, contractual, and operational data to obtain the real value of the company.

The key points are included as follows:

  • Forecasting sector analysis where the company operates

  • Company Analysis: focused on the project’s finances, seeking to highlight its strengths

  • Business Model Structuring: a model must be created that allows investors to check the operational viability and market stability

  • Market Research

  • Asset Appraisals (property, plant, and equipment)

  • Financial Projections

  • Audited financial statements for the last 3 years

An appraisal is not an audit, since the analyst does not verify all of the company’s financial statements nor is it an exhaustive diagnosis of all areas of the company.

The analyst focuses on the decisive areas mentioned in the previous points that give value to the company. Having a business appraisal done by an external consultant favors you in any negotiation.

Whatever your situation, it is always helpful to know what position your company occupies in the current market and its real value.

Seek the advice of an expert consultant

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