Preparing business valuations for unusual industries

I am often asked, have you ever prepared a business valuation for ___________ industry?

It is understandable to assume there are distinct differences to account for when developing a thorough business valuation for a particular industry. Many of our clients only need a valuation once or maybe twice in their lifetime, so they assume that industry experience is useful criteria to evaluate a business appraiser.

However, the reality is our process to prepare an objective business appraisal follows the same fundamentals, applying generally accepted principles and our proven process and methodology. That methodology includes the necessary research to fully understand what may be unique about each industry and the specific segment of the industry.

However, there are two situations that present interesting nuances to preparing business appraisals:

1. An unusual or emerging industry
If you think about an emerging industry, there is little comparative data to review and analyze when a business is in a new sector. Technology is a classic example of where a business launch leverages a new technology, such as artificial intelligence (AI) and there are few other businesses to size the market as the market is not yet fully defined.

So, what do we do in these situations where the market is evolving and being defined? We look at how similar and related industries evolved, especially those with similar operating economics and risks.

2. Restricted businesses
Restricted businesses are those that are heavily regulated including liquor stores and gun shops. We have developed business valuations for many such businesses where additional considerations are accounted for in the valuation including regulatory and licensing requirements, the transfer of licenses, and specific operating economics and risks of those industry segments.

Cannabis retail stores are another example of a restricted business. We are currently developing an appraisal for a cannabis retail store and as we prepare the business appraisal we are addressing the above same noted considerations as we do for other restricted businesses.

When values matter, it is important to retain a certified business valuation professional who has the experience and track record to prepare and support how the valuation was determined and why it was determined. The how and why are as important as the final valuation amount; it is the supporting details that will give you and others the peace of mind that the valuation is reasonable, credible, and can be substantiated.

When values matter, we have the expertise and processes to prepare thorough valuations for unusual industries, emerging markets, and restricted businesses. Our proven approach and methodology are both relevant and applicable across industries and business structures including C and S corporations, LLCs, partnerships, and sole proprietorships.

If you need a business valuation whether it be due to divorce, a shareholder dispute, sale or tax matters (settling an estate or gifting shares), please contact us to discuss how we can assist you.

When Values Matter.

Contact us.