Maximize Value With Your Business Valuation

The process of business valuation and the analysis of the firm it involves can be a valuable tool for any firm. A properly prepared business valuation should provide firm owners with an independent view of the value of the firm’s shares, an independent assessment of the firm’s performance and financial condition relative to its peers, and an assessment of the current economic and industry conditions and outlook. There are a number of fundamental factors that contribute to a firm’s value. Some of these factors are within a manager’s control – such as operating efficiency, the rate of growth in revenue and earnings, and the reliability of the company’s earnings. Understanding each of these factors can help managers better understand how their actions impact value. Operating efficiency includes all the operating aspects of a firm that contribute to its profitability. These include operating metrics such as staff utilization, the firm’s overhead rate, and more. A benchmark analysis of these metrics can reveal where there is room for improvement. The rate of a firm’s revenue and earnings growth has a huge impact on its value. This is due to the fact that someone investing in a firm is buying a share of its future earnings, and a growing earnings stream is more valuable than a static or declining earnings stream. The stability of a firm’s earnings reflects a number of characteristics of the firm and its management. These include risk factors unique to the company such as the depth of its management team, geographic diversity of services, and many other factors. Mitigation of these risk factors reduces the uncertainty of future earnings and increases investor confidence. It is important to understand how your actions impact the value of the firm. By understanding what factors contribute to or detract from value, you can set policies, take actions, and plan a long-term strategy that enhances the value of the firm for the benefit of all stakeholders. Zweig Group’s valuation experts understand the industry and what drives value in your firm. For more information, click here. To buy the 2015 Valuation Survey or for more information, click here.