Choosing the Right Business Appraiser
Our interview today is provided by Drew Dorweiler, founder of Dartmouth Partners Limited and a world-renown business valuation professional. Mr. Dorweiler discusses the importance of finding a business appraiser in your industry and the different types of business appraisers. He also explains earnouts and what it means to recast financial statement, discusses how fees are structured, explains when you should get a valuation, assists readers in determining a price for your business, and, finally, gives the benefits of staying involved in the business after you sell.
Key Points from Our Conversation
- “The most critical characteristic a business owner should seek when engaging a business appraiser is the overall experience of the valuation professional and her/his firm.”
- “One trend that is becoming increasingly popular in the appraisal (and other) professions is “value-based pricing,” representing a transition from a fixed-cost structure to one relating to value perceived or realized by the customer.
- ”Business valuation comprises the determination of two variables: the rate of return/multiple and the benefits stream to be multiplied (capitalized).”
- “The key to the success of an earnout is that it enhances the marketability of a business by providing both sides in a transaction with a common incentive to maximize ongoing financial and operating performance.”