What is your business worth?
At a time when inflation, supply chain issues and a competitive housing market have impacted the cost of many goods and services, knowing your company’s value is important. At Rudler, PSC, we have several team members certified in the art of business valuation to help you learn what your organization is worth.
Becca Thorman is the newest Rudler, PSC Certified Valuation Analyst (CVA), a designation she earned from the National Association of Certified Valuators and Analysts certification process in April 2022.
After serving as a co-op in 2017, she officially joined the Rudler, PSC team as a staff accountant in May 2019. She earned her certified public accountant (CPA) designation in Aug. 2020, two days before her wedding.
Learn more about the CVA designation and what earning it was like for Becca:
Q: What is the value to a business owner of having a CVA like yourself assess their business?
Thorman: It may not be something clients are always thinking of, but something they’re going to need. If you are thinking of buying a business or selling a business, having a business valuation done would be helpful for purchase price negotiations. Business valuations are also used for estate and gift tax purposes.
Q: What are some of the key components that factor into a business valuation?
Thorman: A number of factors go into our analysis, including a look at the overall market, and specifically, the economy for your industry. We also look at a company’s net operating income (before depreciation and interest) to determine how much the business owner is taking home at the end of the day.
Additionally, we examine items within the industry, such as comparable sales, which can be important depending on how niche your industry is and how many similar companies have been sold within those industries.
Q: Has demand for CVA services increased recently? What do you see as driving the demand?
Thorman: We’re doing more business valuations now than we have in the past. Business owners are realizing the value of having CVAs do the work. Many business owners are also thinking of selling their business (or buying another business), and others are gifting shares to the next generation. I think the big benefit stems from comparing a business to its market. So, we're not just looking at your revenue or your set your income total, but also comparing it to how is your industry doing, how's the economy doing, how companies similar to yours are performing, and so on. CVAs offer a fuller picture and more informed opinion.
Companies are worth different things for different reasons, which isn't something many people realize – I didn't necessarily until I started doing this work.
An example of this is the current housing market. Currently, selling your home is an easy task in a hot market. You don't have to host numerous open houses or pay for additional repairs before sales because homes aren’t sitting on the market long. So, the value of a home now is much different than if the market was stagnant and buyers were in short supply. The same is true for businesses.
I think where the value really comes in for a valuation is not just in preparing for a sale but trying to decide how to grow your business. I think it's the planning piece that is more intriguing than the estate piece because if you have an idea of your value, you can use it to get the best price for your business. Those are the areas where you can really help a client and help their business or help them plan.
Q: What does Rudler’s expansion into CVA offerings say about the company in your view?
Thorman: Rudler’s leadership is really big on letting employees find their passion in accounting. They understand that and the value of letting you pursue what you enjoy and will work best with your skillsets. When you have happier workers, that equals better work output, which is a win-win for everyone.