“All that glitters is not gold.”
William Shakespeare, The Merchant of Venice
As a business owner, you’re probably no stranger to the mental acrobatics associated with maintaining an economically viable business. I’m willing to bet that you fall asleep thinking about ways to cut your business expenses, generate revenue and increase your company’s overall value – all while making sure you can save enough for your own retirement. So when you’re approached out of the blue by somebody who wants to offer you a free business valuation, your decision is probably no-brainer. After all, you know that a business valuation is critical in your effort to plan ahead. And let’s face it – free is too good to pass up!
In some industries, it’s become a popular business model to contact prospective or existing business clients to offer them a free business valuation report. But what the sales rep won’t tell you is just how expensive these free services can be.
Is ‘Free’ Worth It?
Not too long ago, I met with a gentleman who sold insurance that was offering free business valuations. He stated that his company had a room full of CPAs and valuation professionals that prepare these valuations. The client only has to spend five minutes on a questionnaire and send in three years of financial data and within a few days the client would have a clear picture of what their business is worth.
Out of curiosity, I asked to take a look the valuation report his company typically gave to the client once the valuation work was complete. Within minutes of reviewing the document, it became clear that not only were his clients given inaccurate information, they were being groomed to purchase more insurance than they needed.
Does it make sense that you spend five minutes filling out a form and send in a few financial documents and within days you will receive back an informed and accurate valuation report? Are you going to make critical decisions about your future based on an individual hundreds miles away throwing your financial data into a canned valuation software program? Really?
If you decide to make the purchase based on the information that was found on this biased report, this valuation will likely end up costing much more than you ever would have ever paid under normal circumstances. On the other hand, if you were to invest in an actual business valuation expert, instead of fretting about your expenses you could concentrate on revenue growth. Because when you hire a business valuation expert, you’re hiring a professional who will take the time and energy to really get to know you, your business and its prospects for the future. Someone who has not only made the art of business valuations a career, but someone who has a proven track record of helping businesses across all industries grow their value by developing and implementing strategies designed to increase future cash flow, decrease business risk and increase growth rate.
Not Free, But Priceless
Email the Rea & Associates Business Valuation Team to find out how business valuation experts can help you grow and better manage your business. The benefits of a Know & Grow Valuation include general business planning, owner’s succession and financial planning, buy-sell agreement values, exit planning strategies, and more.
By Tim McDaniel, CPA/ABV, ASA, CBA (Dublin Office)