Business Valuation: Complete Guide & Professional Services

Learn what business valuation is, when you need it, and get accurate, defensible valuations using proven methodologies

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What is Business Valuation?

Business valuation is the process of determining the economic value of a company by analyzing all aspects of the business to determine its current worth. This comprehensive assessment evaluates financial performance, market position, assets, liabilities, and future earning potential to establish a fair market value.

A professional business valuation provides an objective, third-party assessment of what your company is worth in today's market. This critical financial analysis uses established methodologies and industry standards to deliver defensible results that stand up to scrutiny in legal proceedings, negotiations, and regulatory review.

When Do You Need a Business Valuation?

Mergers & Acquisitions

Buying, selling, or merging with another company requires accurate valuation to negotiate fair terms and pricing.

Litigation Support

Legal disputes, shareholder disagreements, and divorce proceedings often require expert valuation testimony.

Tax Planning & Compliance

Gift and estate tax reporting, charitable contributions, and corporate restructuring require formal valuations.

Estate Planning

Succession planning and wealth transfer strategies require accurate business valuations for tax optimization.

Partner Buyouts

When partners exit the business, valuations ensure fair compensation based on their ownership percentage.

Strategic Planning

Understanding your company's value helps guide investment decisions and growth strategies.

The 3 Main Business Valuation Approaches

1. Income Approach

The income approach estimates value based on the business's ability to generate future cash flows. This method focuses on the economic benefits the business is expected to provide to its owners.

Key Methods:

  • • Discounted Cash Flow (DCF) Analysis
  • • Capitalization of Earnings
  • • Multiple of Discretionary Earnings

Best For:

  • • Profitable, established businesses
  • • Companies with predictable cash flows
  • • Investment and strategic planning

2. Market Approach

The market approach determines value by comparing the business to similar companies that have been sold or are publicly traded. This method reflects what buyers are actually paying in the marketplace.

Key Methods:

Best For:

  • • Active M&A markets
  • • Companies with good comparables
  • • Litigation and dispute resolution

3. Asset-Based Approach

The asset-based approach calculates value based on the company's underlying assets minus its liabilities. This method is particularly useful for asset-heavy businesses or liquidation scenarios.

Key Methods:

  • • Adjusted Book Value
  • • Liquidation Value
  • • Replacement Cost Analysis

Best For:

  • • Asset-intensive companies
  • • Distressed or declining businesses
  • • Holding companies and real estate

The Business Valuation Process

1

Initial Consultation & Scope Definition

We discuss the purpose of your valuation, timeline requirements, and specific needs to ensure the engagement is tailored to your objectives.

2

Document Collection & Due Diligence

Gather financial statements, tax returns, contracts, leases, and other relevant documents. We provide a detailed checklist to streamline this process.

3

Financial Analysis & Normalization

Analyze historical performance, normalize earnings, and identify trends that impact value. This includes normalizing adjustments for non-recurring items, owner compensation, and other discretionary expenses to reflect true economic earnings.

4

Market Research & Comparable Analysis

Research industry trends, economic conditions, and comparable transactions to establish market-based valuation benchmarks.

5

Valuation Analysis & Reconciliation

Apply multiple valuation methods, analyze results, and reconcile differences to arrive at a final value conclusion that considers all relevant factors.

6

Report Preparation & Delivery

Prepare a comprehensive valuation report that documents methodology, assumptions, and conclusions. Simple valuations typically delivered within 2-3 weeks. Timeline varies based on complexity and information availability.

Valuation Methods We Use

EBITDA Multiples

Market-based approach using earnings before interest, taxes, depreciation, and amortization multiples.

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SDE Calculation

Seller's Discretionary Earnings approach ideal for smaller businesses and owner-operator companies.

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Revenue Multiples

Turnover-based valuation methods using revenue multiples from comparable companies.

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Reasonableness Checks

Industry-specific benchmarks and rules of thumb used to test and support conclusions derived from primary valuation methods.

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Free Calculator

Get a preliminary estimate of your business value using our free online calculator. Note: This tool provides rough estimates only and should not be relied upon for any business decision. A professional valuation is required for legal, tax, or transaction purposes.

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What You Get

Comprehensive Analysis

Detailed analysis using multiple valuation approaches to ensure accuracy and reliability.

Market Data Integration

Current market data and comparable transaction analysis to support valuation conclusions.

Professional Report

Clear, well-documented valuation report that meets professional standards and regulatory requirements.

Fast Turnaround

Efficient process with typical delivery within 2-3 weeks without compromising quality.

Expert Support

Direct access to Dori Morrison, CVA, for questions and clarifications throughout the process.

Defensible Results

Valuations comply with NACVA Professional Standards and USPAP where applicable, standing up to scrutiny in legal proceedings, negotiations, and regulatory review.

How Much Does a Business Valuation Cost?

Business valuation costs vary based on several factors including company size, complexity, industry, and the purpose of the valuation. Understanding these factors helps you budget appropriately for your valuation needs.

Business Value Assessment

From $2K

Consulting service for directional insights and value drivers

Calculation of Value

From $6K

NACVA-compliant valuation for planning and negotiations

Conclusion of Value

From $10K

Highest assurance for litigation, IRS, and regulatory needs

Every business is unique. Let's discuss your specific needs and determine the right approach together.

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Frequently Asked Questions

How long does a business valuation take?

Most business valuations are completed within 2-3 weeks from the time we receive all necessary documents. Complex valuations or those requiring extensive industry research may take 4-6 weeks. We'll provide a specific timeline during your initial consultation.

What documents do I need for a business valuation?

Key documents include 3-5 years of financial statements, tax returns, accounts receivable aging, inventory details, equipment lists, leases, contracts, and organizational documents. We provide a comprehensive checklist tailored to your specific situation.

Will my business valuation stand up in court?

Yes. Our valuations follow NACVA professional standards and are prepared by a Certified Valuation Analyst (CVA). Our reports are designed to withstand legal scrutiny. To discuss availability, services, and pricing for litigation needs, please reach out to hello@dorismorris.com (pricing above refers to the valuation report only).

Do you value businesses in my industry?

We utilize professional valuation standards and comprehensive market data to value businesses across industries. Our approach combines established valuation methodologies with current industry research, transaction databases, and market multiple analysis specific to your sector. We research each industry thoroughly to apply appropriate benchmarks and adjustments.

Can I get a rough estimate before ordering a full valuation?

Yes! We offer a free assessment to discuss your needs and provide a rough value range. You can also try our online calculator for a preliminary estimate. However, these are not substitutes for a formal valuation when accuracy and defensibility are important.

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