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We would like valuations.com to shed light on the “what’s my business worth” question

Valuations.com was founded by three business owners that wanted to understand the value of their company without having to spend a lot of time and money for it. By developing a formula that only requires minimal information; they created an easy method for business owners to discover anonymously the worth of their company.

Merging the backgrounds of a Chartered Financial Analyst (CFA), a private equity investor and central banker, and a technologist that founded Corporation Wiki, Valuations.com was brought to life as an advocate for business owners everywhere.

 

BusinessInterviews.com: Currently obtaining a business valuation can cost tens of thousands of dollars and take around a month or two to compile. How are you managing to offer the same service with faster results and for free?

Mike: While formal business valuations can be quite costly in terms of dollars and time with up to 100 pages of back information, the methodology used to attain the final valuation is fairly standardized. Our feeling is that with 3 basic pieces of information, a business owner can get a good idea of what their business is worth. In many cases we feel our valuation can be even more accurate as we pull information from hundreds of thousands of small businesses that are likely more comparable to the subject company.

Our goal is to help business owners preserve, improve, and ultimately realize the value they have in their business by providing transparency and accessibility in the valuations space. Providing a free valuation starts the conversation on how to realize the business value they have and we can then match-make them with service providers and capital sources required for them to take the next steps. We believe the value created for these providers will allow us to offer free valuations in a sustainable way.

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BusinessInterviews.com: What was the biggest challenge that you faced while developing the valuation formula and how did you overcome it?

Mike: One of the big challenges was making the process easy to use and understand. Many valuation processes ask a lot of questions that require many hours for the business owner to research and answer. Our experience with investment banking has shown us that many of the questions asked do not always yield meaningful changes in value. Using large public data sets, provided by the IRS and SEC, we are able to provide intelligent assumptions for the valuation model. We have spent a lot of time and research creating a compelling, easy to use and interactive experience and we will continue to make it better with ongoing feedback from our site visitors.

BusinessInterviews.com: Valuations.com helps business owners quickly and anonymously discover what their company is worth. Why is anonymity an important factor in the process?

Mike: Business owners are very cautious when divulging financial information and for good reason. It’s rarely in their best interest to let their customers or competitors know their financial health. By not requiring a company name, email address, etc., business owners feel more comfortable using our service. Our aim as a company is to break down the opaque walls surrounding business valuations. This will help get business owners off the sidelines and focused on the long term goals for their businesses and for themselves.

BusinessInterviews.com: What are some tips for increasing the value of a business?

Mike: A value of a business can be defined as the present value of its future cash flows with an assumption of a sale at the end of the period. By definition, you can either increase these cash flows or put in place things that will make you more valuable to a buyer down the road. For small businesses, we feel the single most important thing you can do is get your financial statements in order. We advise buyers of small companies to pass on arguably “better” companies with weak financial statements for a company that has numbers we can rely on.   You could have an incredible company but without quality financials it will be tough to prove to anyone.   We’re not recommending a full audit for a small business, but a review or even hiring a CPA to assist will more than pay for itself down the road in a sale.

For larger companies it depends on what the ultimate buyer looks like and what the owners’ objectives are. One example is an owner/operator that plans to sell in 3 to 5 years and wants to “get out” completely. If the most likely buyer is a financial one, such as Private Equity (PE), we would suggest finding (or promoting) someone that can fill that role the owner currently sits in. A PE firm doesn’t want to (or usually have the ability to) run the firm after they buy it and will rely on the existing management team to do so. It will be a tough sell for the owner/operator to say they want to sell and then leave the business if they don’t have that replacement person in place. For a strategic buyer (likely a firm in the current industry) this isn’t so much of an issue as they can most likely absorb the target company into their current infrastructure.

BusinessInterviews.com: How have you been spreading the word about Valuations.com so far? How important is social media to your overall marketing strategy?

Mike: Our first launch was to our contacts and professional networks. This provided us with great feedback and helped confirm that we were on the right track and that we were serving a market that was previously under-served. Last week, we launched publicly via various online and print media outlets.

We are building our social presence now and are observing how folks react to our offering before we begin engaging with social media in earnest. Early results, however, have been encouraging with Twitter and LinkedIn.

BusinessInterviews.com: What milestone are you most looking forward to reaching in 2015?

Mike: We would like valuations.com to shed light on the “what’s my business worth” question. This question, while asked by many is rarely given a quick and direct answer. A business owner or prospective buyer shouldn’t have to pay large fees and wait months to get this answer. Our goal in 2015 is to add transparency to this segment of the market and become the “go to” site for as many individuals as we can.

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