Which professional is most qualified to perform a business valuation for the purpose of selling?
I would like to know how much my business might sell for. Which professional is most qualified to perform a business valuation: an accountant, a business valuator, an M&A advisor, or someone else?
Let me start by saying that I have never walked into someone's office and adjudicated the occupant’s capability based on the degrees hanging on the wall. I'm much more a person who is inclined to think that experiences, inquisitiveness, good thinking, and objectivity are keys to the kind of person you engage to do any professional assignment.
The reason I started with that is because when you asked me which professional is the most qualified to perform a business valuation for the purpose of selling a business, for me a business valuator who has no open market experience wouldn't qualify no matter how many business valuations they've done and how successful they had been in supporting those valuations, in for example a court setting.
I think there is a very, very big difference between someone with open market and transaction negotiation experience and good communication ability, and someone who doesn’t have that experience. So, I start by saying I want to pick someone who has the right experience and characteristics if I'm going to be involved in selling a business. That means they need to know the theory of business valuation, know how to apply valuation methodologies, and know how the purchaser’s advisors and the purchaser likely are going to do those same things. They need to be really good communicators and I think they need to have had M&A negotiation experience and proven success in bringing transactions to fruition.
But to say which specific profession would be the best at it wouldn't be a way I come about asking the question.
I'd look to the characteristics I need in the professional or professionals I was going to engage. I'd really want to know their experience in negotiating transactions. I'd really want to know their experience in understanding synergies. I'd really want to know how inquisitive they were. I’d really want to know how good they were at reading body language. All of these because in my view the better they are at those things, the better they are likely to deliver a favorable result to their principal who is participating in the transaction.