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Sound Business Brokers of Arizona

Business Valuations

Valuing Your Business

Before listing your business for sale, it’s essential to determine a price that accurately reflects both the company’s value and the current market conditions. A business valuation, or appraisal of a going concern, provides an estimate of the economic value of the business or an owner’s interest. This valuation is crucial for both buyers and sellers in determining a fair price, as well as for other purposes such as allocating purchase price among assets, establishing ownership interests in buy-sell agreements, and supporting various legal and business decisions.

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Adding Value to Your Business

If you’re looking to sell a business, it’s critical to look at the value of the business. But a typical business really has two values. The “academic” value is the one determined by a professional business valuation. The other is the “true market” value. The academic value is arrived at with a formula based on the firms’ hard assets, cash flow, industry averages and multiples. The fair market value also takes those items into consideration, but then considers what buyers are really willing to pay. For many small and mid-sized businesses hard assets like equipment, vehicles, land, buildings, and inventory may be limited.  For some small businesses there may be no hard assets at all.  Instead, their value is based on intangibles like employees, business processes, customer lists, location and business relationships. To maximize the fair market value of your business, it’s vital that you capitalize on those intangible assets.
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Valuation Options

There are two primary approaches to business valuations: a Business Broker Opinion of Value (BOV) or a Formal Business Appraisal. A BOV is not a formal appraisal, but rather an informed estimate provided by an experienced business intermediary based on the “Most Probable Sales Price” (MPSP) range. It offers a practical, market-driven perspective on value.

It’s important to recognize the distinction between a Formal Business Appraisal and a Business Broker Opinion of Value (BOV) so you can choose the one that best fits your specific needs.

A Business Broker Opinion of Value (BOV), also known as a Broker Price Opinion or Broker Valuation, offers a practical and market-driven assessment of what a business may sell for. Based on the broker’s industry expertise, analysis of local market conditions, lending trends, and comparable sales, the BOV provides a realistic and actionable valuation. A BOV is often coordinated with the owner’s CPA and can be used not only to set an asking price but also to strategically position the business for sale at a future date.

Business Broker Opinions typically consist of 15-20 pages, including supporting documentation, and have a turnaround time—usually 10-14 business days once all necessary information is gathered. This approach is ideal for owners looking for a professional, informed valuation that’s both timely and tailored to market realities.

A Formal Business Appraisal is conducted by certified professionals, similar to real property appraisers, and provides a comprehensive, objective assessment of a business’s value.

Unlike brokers, appraisers do not typically engage in the buying or selling of businesses or real estate, focusing solely on available data. Formal business appraisals are often required for legal, financial, or lending purposes, and are essential for securing SBA funding.

Pricing for business valuation services
vary depending on the size and scope of assignment.

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