What Role Can a Corporate Advisor Play in Your Business Valuation?

As an entrepreneur, investor, or business owner, chances are that you will eventually come across a corporate business broker for some reason or another. A common reason why businesses reach out to corporate brokers is for valuations. But why hire a corporate advisor? Why not simply do a valuation of your company yourself? 

Understanding Corporate Valuation

As we consider the role of a corporate advisor and how they can benefit your business through valuation, it’s best that we clarify what we mean by a corporate valuation. Like a standard business valuation, a corporate valuation is how a corporation's worth is valued. Generally, a corporate company's valuation is dependent on several financial metrics that accumulate its entire worth. 

Generally, a business would need to have a valuation done for several reasons, such as:

• When selling or buying a business
• For mergers and acquisitions
• To navigate tax and remain compliant 
• For strategic growth planning

A corporate valuation of a business can provide invaluable information regarding the company's financial performance, highlight potential risks, and present areas that need improvement. Furthermore, a valuation can also be used as a benchmark to measure progress for businesses as they strive towards their goals. 

How corporate advisors assist with a valuation

Corporate advisors are professionals well-equipped with the skills necessary to accurately assess and provide a valuation for your company. Typically, here’s how they would be involved in the process:

Offering objective business assessments

If you’ve built your company from the ground up, it’s easy to confuse your time and efforts with how much your business is realistically worth in the current markets. Thankfully, corporate advisors take an impartial approach when conducting corporate valuations. They have no biases or emotional attachments to the business but only focus on a data-driven estimation based on industry standards to provide you with a more accurate valuation. 

Analysing your financials

Corporate advisors need to delve deep into your business's financials to provide you with an accurate valuation. They’ll review your statements, cash flow, balance sheets, tax data, and profitability ratios to calculate the company's current financial position and estimate its future position. 

Analysing the market and industry

External factors also play a significant role in determining the cost of your business. Corporate advisors will consider current market trends, the popularity and potential for growth in your industry, the risks to it, and the competition's performance. 

Selecting the right means of valuation

Lastly, certain advisors use different methods when conducting a valuation or more than one. Here are some methods they might use to do your corporate valuation:

• The comparable sales method which compares your business to other sold in the same industry that are similar to your business
• Asset-based valuation, which focuses on your assets and liabilities.
• A discounted cash flow analysis

Corporate advisors also offer financial and strategic planning

Corporate advisors can also assist you with financial and strategic planning for your business to help you achieve your goals. For instance, they could help you manage your capital structure, balance debt and equity financing, and plan to ensure sustainable and progressive growth. 

If you ever need to raise funds or invest, they can assist you in venture capital, bank loans, private equity, or creating a plan to present to your investors. In addition to that, they can also help you identify risks as you navigate through the business market. 

Are you looking for a corporate advisor to help you with your business valuation?

Interested in hiring a corporate advisor to assist you with your company’s valuation? Lloyds Corporate Advisors is one of the best corporate advisory businesses and specialises in conducting corporate valuations. Contact them today to ensure you get the best valuation possible in Melbourne. 

Final thoughts

Knowing the entire worth of your business, including its tangible and intangible assets, is invaluable information that can assist you as you try to sell your company or simply provide you with a benchmark regarding its performance and whether you’ve achieved your goals or not. Either way, a corporate advisor plays a pivotal role in valuing your corporation.