The Significance of Business Appraisal in Mergers and Acquisitions

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5th May 2016

While buying or selling a business, it is very crucial to learn the true value of the company. The expertise of certified business appraisal professionals plays a significant role in facilitating the merger or the acquisition along realistic lines.

Read on to find out three strong reasons to use certified business valuation services for M&A activities.

Business appraisers use objective, logical and meaningful methods to estimate the market value of a business

There is absolutely no guesswork involved with business appraiser. They use standard, transaction-based, proven approaches to evaluate a business and its worth. They consider the balance sheet, research upon comparable business units and draw a fair estimate of the market value for a business.

They help set a realistic price

In some cases, there are strategic reasons for a business to acquire another at a rate well above the fair market price. For instance, a large conglomerate may want to wrap up smaller competitors in the market under its own brand. It takes expert business appraisers to study the market and analyze such factors. Business appraisers through their research add the premium amount to the market value before determining the asking price.

Helps negotiate the terms of the deal

As much as the price negotiation is essential, the terms of the deal must also be determined rightly. Business appraisers assist in this front too by considering a number of factors like structure of the business, tax consequences, and new licenses and so on.