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The Purpose of Your Business
Valuation Determines Your Path

Market Assessment Bespoke Approach Synergy of Both Worlds Start Your Valuation

The purpose of the business valuation defines the path. Are you looking to assess the synergistic value of a practice, envisioning its integration into a larger entity? Or are you focused on the future economic benefits that will flow to the buyer or investor? The purpose sets the stage for the valuation journey. Understanding your objectives ensures that we tailor our approach to best serve your needs and maximize the value derived from our analysis.

Market Assessment

The market approach stands as the stalwart choice for many, and for good reason. It's straightforward, easily understandable, and often the go-to option for assessing synergistic values. If you're evaluating a practice with the expectation of its operations being absorbed into an acquiring firm, then the market approach may be your beacon of clarity. This method shines particularly bright when valuing a book of business or practice for its strategic value.

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Bespoke Approach

On the other hand, we have the income approach, with its hallmark being the discounted benefit stream method. Here, we gaze into the future, basing valuation on the economic benefits yet to come. This approach finds its stride when evaluating a going concern where future earnings are anticipated to either rise or fall. However, it's worth noting that this approach may not always be the ideal fit for books of business or small practices.

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Synergy of Both Worlds

In truth, the proper valuation often demands a harmonious blend of both approaches. Adjustments are the keystones in this process, allowing us to mold the valuation to reflect the unique tapestry of risks and opportunities woven into the fabric of the subject practice.

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Deriving Value is Complex - Rely on Our Expertise

Valuing for a business should be appropriate to the purpose for your analysis and should capture the essence of what you’ve built. Our data and expertise are the keystones in this process, allowing us to mold the valuation to reflect the unique tapestry of risks and opportunities woven into the fabric of the your business.

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Enhance your decision-making prowess by securing a comprehensive market value analysis. Simply add it to your cart to embark on a journey of informed insights and strategic planning. Elevate your understanding of market dynamics and seize opportunities with confidence. Take the first step towards clarity and precision by adding our market value analysis to your cart today.

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Advisors Who Trust Us

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    FP Transitions' thoroughness, attention to detail, and professionalism deeply impressed us, offering invaluable insights into our business's worth and potential. They displayed a keen understanding of our business, which allowed them to translate the nuances of our business to a practical valuation. We're genuinely appreciative of FP’s analysis, which has greatly enriched our perspective and set a solid foundation for our strategic decisions moving forward.

    Taylor J. Whelan, CFP®

    Partner | CFO | Investment Advisor, Whelan Financial

Frequently Asked Questions

Is price the same as value?

The asking price of a listed practice is based in value, but they are not the same thing, and are often not exactly the same number. Value is the economic advantage (or series of benefits) that the business holder expects to receive. Price is the actual cost paid for that value.

 

Value is assessed by a credentialed professional using one of three standards and methods based on the purpose of the valuation. A variety of factors are considered and weighted depending on the purpose and circumstances of the assessment. Businesses valued for the purpose of a sale have a predictable set of metrics and consider the market and demand.

 

Price is ultimately decided upon by the seller–though often under the guidance of an M&A consultant. The business valuation helps a seller set the asking price for the business, but considers other factors as well including personal attachments, anticipated deal terms, and the seller’s preference.

What’s the difference between Fair Market Value and Income-Based Value?

These are two of the common standards used to value a business and the two that are most appropriate for financial services firms. Determining which is applied to the valuation assessment depends on the purpose of the valuation. The method then helps the assessor to determine the perspective and premise of the assessment to zero in on the most accurate value for each business. Fair Market is commonly applied to businesses who are preparing to sell their business or are generally monitoring value to gauge growth. Income Based valuations are most commonly applied for the purpose of investment like internal succession and mergers.

 

Find out which valuation is right for you. Schedule a Consultation

How do you determine value?

The FP Transitions team of accredited and industry-specific valuation experts determine business value based on a variety of factors which are assessed and weighted depending on the purpose of the valuation. The purpose of the valuation dictates the method and standard used, from which the assessor can determine the perspective and premise of the assessment to zero in on the most accurate value for each business. FP Transitions valuations consider up to 155 business metrics and rely on a database of over 16,000 valued businesses and transactions to support the final opinion of value.

Can I just use a multiple of revenue/EBITDA to determine my value?

Using a multiple of either revenue, EBITDA, or any other metric is an extremely inaccurate way of determining the true value of a wealth management or financial services business. Applying a multiple does not consider the reason for the valuation, unique circumstances, or who the value matters to and why. Using a multiple can lead to money lost, missing out on financing options, and costly, late-stage transactional disputes.

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