What Is My Business Worth?

Once upon a time, I was part of an ownership group that was involved in the spin-off of our division as a separate and independent company. I remember that time very well. It was filled with high stress, sleepless nights, and lots of very anxious business partners. The thought of spinning off our own company and going it alone was exhilarating, yet terrifying. But to get the deal done, we had to reach an agreement with the parent company on one very important point: What was the business really worth?

I recall vividly that the business valuation issue became a flash point in several heated debates and downright ugly discussions. The parent company hired their appraisers and came up with one valuation. Our ownership group’s appraisers came up with a different valuation. The difference became a point of contention between the two groups.

Why was the valuation of the company such a sticking point? The valuation of the business set the foundation for what we would have to pay to gain ownership of the business. It also set the tone for how much equity the parent company would potentially hold in our division. We all knew that this one issue could make or break the deal.

The argument over business valuation can play out each and every time a business is bought or sold. This scenario is perhaps most prevalent in the franchise segment; a market segment that boasts over 760,000 franchised small businesses in the USA according to the International Franchise Association (IFA). Every time a new franchise is established, bought, sold, or transfers ownership, business valuation will undoubtedly be at the heart of the transaction.

The Quick Service Restaurant industry, for example, is highly franchised with over 56% of all establishments being franchised according to the IFA. Every year, thousands of these franchise establishments will be launched, bought, sold, or will change ownership. If you are involved in a franchise, especially a restaurant franchise, then you know that the valuation of your business can make all the difference. The valuation of your franchise operation often dictates how much you pay in taxes, represents the book value of your business, and determines the increase or decrease in value of your franchise investment.

However, getting an accurate and up-to-date valuation of your franchise operation can be difficult. It often requires searching for, and hiring, an appraiser – a process that can be taxing for any business.

Fortunately, there are now emerging solutions to help any franchise to get a fast, accurate, and comprehensive restaurant valuation at any time. QuikVal.com, for example, has packaged a 25-year proven approach to restaurant valuation into an on-demand service that is accessible via the internet:

www.QuikVal.com: Expert Restaurant Valuation. It Figures™

QuikVal™ is a fast and straightforward online method for acquiring an expert valuation of any restaurant business. They have packaged a proven service into a reusable set of methods and tools that can help business valuers, appraisers, and business owners to complete valuations when and where they need them. QuikVal is convenient, confidential, accurate and affordable. The website allows for secure and confidential Data Entry by restaurant owners, operators, franchisees, and business valuation experts.

Although franchise valuation may not get you excited, it is a critical area that is beginning to edge closer to the do-it-yourself solution model that is at the heart of ClearBrick. We applaud companies like QuikVal who are taking the initiative to make business services – such as restaurant valuation – more accessible and affordable than ever before.

So what ever happened to our attempt to spin off our division into a separate and independent company? It didn’t happen. We couldn’t get agreement on a fair valuation of the business. That, along with other factors, nixed the deal. Perhaps if we only had a fast and accurate way of valuing our business…