Small business owners do not know their organization’s true value—opportunity for appraisers

BVWireIssue #81-1
June 3, 2009

Although 43% of them plan to sell their businesses within the next 10 years, 58% of respondents to a poll of U.S.-based small business owners have not had a formal business valuation within the last year. Furthermore, they do not plan on having one done in the future, according to a new survey by the management consulting firm George S. May International. The poll of 921 small business owners across the United States also showed that business owners have some misconceptions about when a formal business valuation is needed. Consider, for instance, that 41% of respondents said they thought a valuation should only be conducted upon the sale of the business, while 30% said one should be done every three years, and 29% felt that one should be conducted once a year. The takeaway for BV experts: A back-to-basics approach to valuation that focuses on the “whys” of business value—how to get it and how to keep it—may help your firm retain clients and prospects. “Understanding the factors that determine the value of any business will pay tangible dividends by focusing on ways to increase short and long-term profitability,” said George S. May managing director, Paul Rauseo.

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