The concept of business valuation has its roots in the field of accounting. The valuation process is designed to value the net realizable present value of a company’s current and future cash flows.
The market approach refers to a market-based valuation method, where the process starts with the observation of a company’s current market capitalization, the price that a willing buyer would pay for the shares of the company in the open market (and a willing seller would accept) to the nearest whole dollar. This represents the company’s true value in the open market at that moment in time. In the end, the ‘fair market value’ or market capitalization is the most direct representation of the company’s market value.
Importance of Business Valuation
A business valuation estimate is the most important type of financial valuation that every entrepreneur must do for their business. A valuation estimate will not only help you acquire a business, but will also help you to settle down financially with your business partners, lenders, and financial institutions.
Businesses planning to close, merge or acquire another company need to undergo the process of business valuation. An accurate and up-to-date valuation is critical for any business.
Business Valuation Software
Business valuation software makes it easier for accountants to value a company accurately and efficiently. With the help of business valuation software, accountants can easily compute and value a company with a quick valuation of all the assets, liabilities and equity.
A person who has a good knowledge of the process can use business valuation software. It takes away the burden of knowing various valuation theories and lets an individual do away with complicated mathematics to analyse the position of the business in the market.
Most of the software is available on the Internet. It is considered to be time-efficient, value-adding and economical. As it is available on the Internet, it can also be accessed globally.
Some Business Valuation Software Available in the Market
Some of the available software on the market include BIZpricer, BizPricer’s business valuation model, Ball Park Business Valuation, Money Soft Corporate Valuation, Valuer Business Valuation software, and E ValPro, to name a few. Some of the software is also available for free, at least on a trial period basis.
Business Valuation software from MBA Ware offers 19 valuation methods for preparing a report on business valuation. The software combines with a standard interface, such as Excel to gather financial data about a company. The software also provides the ability to import annual statements and other financial reports.
Other than this, business buyers or sellers who need a complete evaluation of a business entity can also use BizPricer. The software uses Microsoft Excel and Word programs to analyse the data.
Most business valuation software combines relevant indicators for analysing future performance with underlying financial data, such as revenue, variable and fixed costs, in finding the net worth of a company in the market. A business enterprise should download the free version to understand the features given in the software.
The Internet can be a boon and a bane because it solely depends on the business to research the Net to find the right software to satisfy their demands.