- Does Arrow perform business appraisals in my state?
- How does Arrow perform an appraisal of my business?
- What is the difference between a Limited Business Appraisal and a Summary Business Appraisal?
- How does Arrow assure confidentiality?
- How do you treat "extraneous" expenses?
- What information will I need to provide?
- Why do you need the owner(s) W2 form(s)?
- How much does a business appraisal cost, and how long until it is completed?
- How do I get started?
Does Arrow perform business appraisals in my state?
Yes, we perform business appraisals all over the United States, from California to Maine, Alaska, Hawaii and everywhere in between.
Before we will accept any engagement, we will first confirm the proper type of appraisal for your business. If the appraisal will be used for taxation or litigation purposes (such as a divorce), we will provide you with a Certified Business Appraisal that conforms to
all USPAP and IRS guidelines. For all other purposes (such as preparing your business for sale or a buy/sell agreement), we offer a Limited Business Appraisal or a Summary Business Appraisal.
In determining the value of your business, we consider all appropriate appraisal methods. However, in most cases, we use the Market Comparables Method which is generally considered to be the most appropriate method for valuing privately-held businesses. We compare the revenue and discretionary earnings characteristics of your business to similar businesses that have been sold in order to determine the appropriate fair market value of your business.
Though both reports utilize the Market Comparables Method of valuation, the Limited Business Appraisal is a more in-depth valuation report that uses individual comparable sales rather than aggregate comparable sales data for a particular industry. Furthermore, the Limited Business Appraisal includes several third-party economic and industry reports including a national economic forecast and an industry demographic report.
Limited Business Appraisal:
- Client interview (for financial statement adjustment purposes)
- Full analysis and normalization of all applicable financial statements
- Revenue, expense and earnings trend analyses
- Market Comparables Valuation Method, utilizing individual sales data from Pratt's Stats®, Bizcomps®, and/or FBBA® databases
- Justification of Purchase Price Valuation Method
- Full explaination and support for all valuation approaches and conclusions
- Zapdata® Industry Report
- Center for Economic and Industrial Research (CEIR) National Economic Outlook Report
Summary Business Appraisal:
- Client interview (for financial statement adjustment purposes)
- Full analysis and normalization of all applicable financial statements
- Revenue, expense and earnings trend analyses
- Market Comparables Valuation Method, utilizing aggregate sales data from Pratt's Stats®, Bizcomps®, and/or FBBA® databases
- Full explaination and support for all valuation approaches and conclusions
We understand your concerns, and take the issue of confidentiality seriously. First, as appraisal professionals, it is our job to maintain confidentiality at all times. As such, all conversations, email correspondence, notes, reports, computer files, and financial data remain in our secure office at all times. Furthermore, we recommend that you send us information using 'delivery confirmation' services (such as FedEx® or UPS) for security purposes. Second, as part of our appraisal service, we conduct a client interview in order to clarify any questions that may arise after reviewing the financial records of the business. However, when we contact you to ask these questions, we practice discretion so no one is inadvertently made aware of our services to you. Finally, we do not maintain any type of mailing list, nor do we disclose your information to any third party. In fact, after we perform our services for you, you will not be contacted by us again. You will need to contact us if you require our services in the future.
A business appraisal involves many steps. One of the first steps requires "normalizing" the financial statements, so we can compare "apples to apples." Most businesses have some extraneous (non-operating) expenses. Examples include non-cash expenses such as depreciation and amortization, as well as, interest on debt, owner fringe benefits, one-time or extraordinary expenses, other miscellaneous expenses, etc. Under most circumstances, these non-operating expenses are added back to the bottom line to arrive at Seller Discretionary Earnings (SDE) which is used to compare one business to another...apples to apples.
For the Summary Business Appraisal, we require:
the most current 12 months Profit & Loss Statement (e.g., June 1, 2004 through May 31, 2005) and a current Balance Sheet or the Profit & Loss Statement for the previous fiscal year (e.g., fiscal year 2004) and the year-end Balance Sheet owner(s) W2 form(s) For the Limited Business Appraisal, we require:
the past three (3) years of 12 month Profit & Loss Statements and a current Balance Sheet or the past three (3) fiscal years of Profit & Loss Statements and the year-end Balance Sheet owner(s) W2 form(s) For the Certified Business Appraisal, we require:
the past seven (7) years of 12 month Profit & Loss Statements and a current Balance Sheet or the past seven (7) fiscal years of Profit & Loss Statements and the year-end Balance Sheet owner(s) W2 form(s)
The owner(s) W2 form(s) are requested so that we may accurately determine owner's compensation and owner's payroll taxes and treat them as separate from the total payroll and payroll tax expenses. This also aids in properly normalizing the Income Statement to the one owner/operator standard.
The Summary Business Appraisal costs $1,800, and will be completed in 10 days.
The Limited Business Appraisal costs $3,200, and will be completed in three (3) weeks.
The Certified Business Appraisal costs $8,900, and will be completed in six (6) weeks.
For more information, please see our section on Appraisal types & pricing.
The best way to begin is to review our section on Appraisal types & pricing, and decide which type of appraisal report suits your needs. Then fill out our information form to begin.
If you have additional questions, you can send us an email at info@arrowappraisers.com or, if you prefer, you can call us at 877-BIZ-VALU (877-249-8258) or 828-350-5858. We welcome any questions you may have, and look forward to serving you.
