Business Valuation Software

Finding the Value In Your Valuation

Whether you're in business or looking to buy one, business valuation software speeds things up for you by providing a standardized valuation process to a predetermined series of inputs. This makes business to business comparisons possible, and enables sensitivity analysis around things like cost of funding.

Need for Valuation

Buying and selling is probably the most frequently occuring reason for requiring a business valuation, but you can need a reliable way of cranking out valuations for any number of other reasons:

• Determining the price of shares when allowing investors to exit or enter the business

• Computing the value for a merger

• Putting together incentive plans for directors and employees

• Inheritance and estate planning

• Divorce proceedings (ouch!)

Critical Business Valuation Metrics

Business valuation is more than just pumping out one number. It's about producing some essential reports that can provide the user of that information with what they need to make the appropriate decision.

For example, cash flow is often critical in a business, and you need to know that the business will continue to spin out enough cash to cover working capital and long term assets as well as pay down any funding raised for the deal. You would expect your valuation software to cover this.

Comparing Valuations

Comparing valuations against different companies, or against standard industry classifications (SIC's) is very useful feedback about the valuation you produce, as it enables you to assess where the business being valued stands in the general market and whether the valuation seems reasonable or not.

These kind of features transform business valuation software from a fancy spreadsheet, into something much more meaningful. The value is in the time they save, and the leverage the user gains from the expenditure of the development dollars by the software company.

As discussed in small business valuation and business valuation methods, you would expect your business valuation software to cast a business valuation based upon the established and most important valuation principles, and extract essential bargaining information:

• Assets based approach

• Earnings power and growth prospects

• Computation of Goodwill

• Discounting for the time value of money, the required rate of return and the cost of funds for the deal.

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