Some Key Questions to Ask a Business Appraiser Before Hiring One

Business valuations have always been a long and complex task. Though business owners may be proficient with their daily operations, they require an outside professional’s help when it comes to objectively assessing their business holding’s worth. If you are a business owner, you too may want to look for experienced valuation professionals. But the decision should only be made once they have answered some important questions about the process. Here, we discuss some of the key concerns businesses are faced with when looking to hire a business valuation analysis professional.
What plan are they thinking to adopt to handle the valuation?
There are different approaches professionals working with various investment banks India adopt when dealing with business valuations.
•    First is the income method. This approach returns with a valuation after calculating the total existing value of estimated monetary gains that is company is likely to procure. With this approach, the reviewer may opt for a single time-frame capitalization approach or a multiple time-frame marked down income approach.
•    The second method is valuating based on assets. Through this approach, the appraiser will evaluate the unit’s liabilities and assets against standard market rates and then reassess factoring in unforeseen liabilities and the market worth of immovable assets.
•    The third one is market method. With this method, the evaluator will come up with a value indication by analysing the company’s standing against its contemporaries that were sold out. Under this approach, the assessor may work with direct market data course or public company approach.
Knowing which discounts will be valid
The various discounts utilized in assessing a closely knit business unit comprise a discount kept aside for zero control, blockage discount, zero marketability and other factors. Though there are several discounts, the most popular ones that find application in business evaluations include lack of marketability and lack of control.
How do objective opinions differ from an appraisal?
Comprehensive business evaluations usually take into account all applicable methods and styles which the assessor deems as pertinent for deciding the business value. These assessment reports generally comprise market conditions, economic trends and in-depth research of the unit’s industry.
On the other hand, objective opinions are essentially the appraiser’s viewpoint if the indicated business unit’s value is fairly calculated for the business’s shareholders. Such opinions usually will not come with a value estimate or any value indication.

Understanding the Different Types of Corporate Reshuffling

Corporate revamps and restructuring business models now longer a one-off phenomenon. They are now a commonplace in the business world. Such restructuring decisions are taken by small as well as big entities across the world. Many businesses now make a part of their strategic goals to expand or narrow down their business portfolio depending on their present situation.

Understanding company expansions and contractions

Business entities that intend to diversify their portfolio usually rely on takeovers, joint ventures, asset buyouts, mergers and acquisitions to meet their business goals. Though these processes may sound different, they are simply variants of corporate reshuffling that merges together profitable reserves of two different units on one common platform. They are often taken as harmonic in approach since they are expected to bring in augmented profits that come from economies of scale, asset multiplication, making the best use of tax benefits and creating a highly systematic management system. 

On the other hand, contracting essentially means a company divestiture, while it could also mean a split up, spinoff or any other type of restructuring that narrows down the business portfolio. In such a scenario, the critical task is getting rid of loss-inducing units and verticals so as to limit heavy losses. These steps are often taken when a business is aiming for higher productivity and efficiency. Also, the reason behind such a decision could be focusing on sectors that come with high-profit spawning capacity.

When an organization decides to sell off some of its assets that are not fulfilling their financial goals, they will require the guidance of sell side advisory firms at some point or the other. Though a business may think divestiture is an easy job at hand, it is actually quite complex. Apart from comprising selling off a part of the organization to another, there many things involved in the process. It has to be a calculated move taken keeping in mind the best interests of the seller. A spinoff is a situation of when an entity is transformed into a different unit that has its separate legal presence and a shared seal. On the other hand, a split up happens when one organization is divided into either two or more than two separate entities.

Advisory firms not just assist businesses with their expansion or contraction plans, but they also come in picture when an entity is going from private to a public limited one and vice versa.

Here’s a Quick Lowdown on Mergers and Acquisitions

In the world of business, acquisitions and mergers are terms used quite frequently. However, not everyone is aware of what these terms actually mean and imply. Quite often, both the terms are used side by side. To put it in simple terms, they mean when two business holdings decide to come together and shape up as one single entity.

Understanding the key difference between a merger and an acquisition

Majority of times, a merger happens when two entities of nearly same clout and size engage in a tie-up and start functioning as one unit. Stocks of both the entities are also merged together. On the other hand, a company acquisition happens when a bigger business entity decides to buy out a company of a smaller scale. This usually assumes the model of a complete buyout or a takeover. An acquisition might be a mutually decided upon takeover or could be the outcome of a bitter feud between the two companies. In the latter scenario, the smaller entity has nothing much to say and usually ends up heeding to the demands of the larger firm. In such a case, the smaller firm stops operating independently and the larger company goes on with trading the small company’s stocks.

Cross border mergers and acquisitions are commonplace in the whole sphere of business activities. They are not a new phenomenon and have been happening since several decades. A classic example of a cross border takeover is when several low-scale British firms stopped operating once they were bought over by Santander, a renowned banking giant from Spain. This was however a smooth acquisition since regardless of the size and clout, both the sides decided to showcase themselves not as an acquisition, but more of a merger.

A classic instance of a merger could be the coming together of SmithKline Beecham and Glaxo Wellcome that happened in the year 1999. Post-merger, both entities became one and came to be known as GlaxoSmithKline. On the contrary, some much-publicised acquisitions that shook the business world include that of Daimler-Benz taking over Chrysler in 1999. On many occasions, acquisitions and mergers are difficult to categorize and it is quite challenging to scrutinize the various elements that go into determining whether a particular merger or an acquisition has proved to be failure or a success. 

For a successful merger or even an acquisition, it is very important that both the entities recognize each other’s strengths and weaknesses if they wish to do business in a harmonic way.

What is the role of corporate finance firms?

Corporate finance firms mainly deal with monetary decisions made by business enterprises. They also deal with the tools and analysis that go into making that decision. In a company, the corporate finance department handles budgeting. They decide how much money needs to be allocated to each part of a business. They also determine ways to finance projects for the business.
When it comes to corporate finance firms, the definition varies across the world. For instance, in the US, it is used in a broader sense compared to the UK. It is used for describing decisions, activities or techniques that deal with several aspects of a business organization’s finances and capital. In the UK, this type of firm is involved in transactions in which capital is raised for creating, developing, growing or acquiring a business.
Corporate finance advisors deal with monetary aspects of a business so that it functions efficiently, increases profits, minimizes cost of production and grows. Here is the classification of the importance of corporate finance firms:
•    They play a vital role in decision making that needs to be done on the basis of available capital and resources. When investing in a new venture, the company needs to be consider factors like, availability of finances and the duration for completion of the project. This is where the role of corporate finance advisors comes into picture.
•    Such firms or advisors help the company in research and development. It is important for a business to research the market and develop new products for appealing the customers. All these activities require financial support and guidance that the advisors provide.
Be it liquidity strategy or corporate finance, it is important to seek professional help. Only a team of professionals can deliver the desired results for your business. 

Understanding Business Buying Behavior

Business buying behavior involves an industrial buyer or a business to business buyer. It involves business organizations that purchase goods and services for production of other goods and services. Business buying behavior also includes reselling, renting or supplying to other businesses.
In the business market, there are several organizations that are involved in the manufacturing and distribution of products and services that are sold or provided to other organizations. Since the business market is huge, it draws interest from millions of companies across the globe that are marketing to business customers exclusively. For these marketers, it becomes necessary to understand how purchase decisions are made by businesses. This helps them in improving their marketing efforts.
Categories of Business Buyers
There are mainly four categories of business buyers, including producers who purchase goods and services for producing other goods, resellers who purchase finished goods and resell them to make profit, institutions like universities, colleges and hospitals and the federal, local and state bodies that purchase goods for benefitting the public at large.
Factors that Impact Business Buying Behavior
There are several economical, company, interpersonal and individual factors that can influence business buying behavior. For instance, economical factors like technology changes, regulatory changes, fiscal policy, competition, monetary policy and so on influence buying behavior of businesses. Business buyers keep tracking and analyzing economic factors. Even company level factors play an important role. For instance, sales experts have to focus on understanding how the purchase department is organized and who are the main players in the department.
Be it business buying or venture capital advisory, it is important to seek professional help in understanding what needs to be done and how. In business buying, demand for products and services by businesses is affected by consumer purchases. Even a small swing in consumer demand can create huge changes for business purchasing. 

How Recapitalization Benefits Business Owners

It is important for business owners to consider all available opportunities when envisioning long term goals. This is important because they have a lot of wealth tied up in their companies. For instance, when in need of liquidity, many business owners prefer recapitalization. It is a powerful tools of corporate finance, allowing them to reduce the amount of wealth at stake by selling a portion of their company to a private equity firm or an outside investment firm. 

Through recapitalization, capital infusion happens, again allowing the business owners to diversify their holdings without having to lose control over the company. There are several ways in which outside capital can benefit a company; however, the benefits will majorly depend on the goals of the owners and the company’s development stage. 

If you are a business owner and you are opting for recapitalization, it will provide your business with the much needed capital for various plans such as, diversifying personal portfolio, growing the company, expanding business in new markets and so on. 

Here are top three reasons why recapitalization can prove beneficial for your business:

• Even if everyone has been pushing you to retire because you have been working at your business for decades, you don’t necessarily have to. You can take some stress off by choosing to recapitalize the business. You will reduce your involvement to a great extend but also stay in control.

• This is a great move if you don’t want the company culture to change which usually happens in a buyout. 

• Third benefit is that you can get the required liquidity to seize various opportunities available in the market. 

Whether it is recapitalization or business acquisition, it is recommended to hire experts who will give you the best advice.

3 Benefits of Investing in Business Valuation Services

Business valuation is one of the critical tools in a business owner’s arsenal. Business valuation is not just important when you are selling your business. It is an important task that needs to be implemented throughout the business cycle because it offers various benefits in running a business smoothly.
If you are a business owner and you are planning to invest in business valuation services, here are some of the benefits that you can enjoy:
1.    It will give you a better knowledge of your company’s assets. You cannot work with estimates because it will mean generalizing everything. You need to gain specific numbers through the valuation process so that proper insurance coverage can be obtained or reinvestment can be done in the company in the right manner. It will also give you a clear idea of how much you can sell your company for, if the need arises.
2.    You will get a better understanding of your company’s value. For instance, if you are contemplating selling your company, you need to know its true value in the market. This process needs to be completed even before the business has been put up for sale. This is because if you know the value of the business beforehand, you can achieve a higher selling price.
3.    Even during mergers and acquisitions, it helps to know the real value of your business. If a big company wants to purchase your business, you can show them the value of your business as a whole.
Whether you need business valuation services or you want the right management buyout strategy for your business, it is necessary to seek expert help. There are several companies that offer these services so make sure you choose the right one in order to get desired results.