How to prepare for a small business valuation

Whatever the reason for valuing your business: to raise investment, to find a business partner, to sell your business, whether you are doing the valuation yourself or engaging professionals, you need to prepare for the valuation.

Get your documentation in order

A buyer or investor will want to see financial statements for the last year or few years, a statement of financial flows: profits and losses.

Also prepare documents from this list:

• Employee job descriptions, skills and experience information, work history, performance reviews and wage rates.
• Information on competitors and a comparison of your business with them.
• Details of physical assets such as machinery, buildings, equipment and inventory.
• Sales reports and financial projections.
• If you have intellectual property, make a list of patents, inventions, copyrights and trademarks.

Make sure these reports and lists are accurate and up to date.

Make copies of documents

If you are planning to sell your business or are looking for an investor for your business project you will need to make copies of your licenses, permits, certificates and contracts with suppliers and partners.

List and appraise intangible assets

Customer base, loyalty program, good exposure in search engine results, reputation of your company.

Write a brief history of your business, indicate whether you have had any offers to buy in the past, what makes your business unique and where you stand in comparison to other businesses in your industry.

These intangibles have a significant impact on the valuation of your business.

If you have experience of preparing for a business valuation, share it with members of the bepartner community.