Frequently Asked Questions (FAQs) on Enterprise Valuations
1. What is an enterprise valuation, and why is it important for my business?
An enterprise valuation is the process of determining the economic value of your business as a whole, including both tangible and intangible assets. For Oregon business owners, valuations are important when preparing for a sale, securing financing, succession planning, estate planning, or even resolving partner disputes. It helps you understand the true worth of your company in todayโs market.
2. How is a business valuation different from an asset appraisal?
An asset appraisal values only physical assets such as equipment, vehicles, or property. A business valuation considers the entire enterprise, including cash flow, growth potential, goodwill, customer base, and intellectual property. In Oregonโs diverse economyโwhether itโs agriculture, manufacturing, or technologyโenterprise valuation provides a more complete picture.
3. What methods are commonly used to value businesses in Oregon?
The most common methods include:
Income Approach: Based on expected future earnings and cash flow.
Market Approach: Compares your business to similar companies that have sold.
Asset-Based Approach: Focuses on net asset value (assets minus liabilities).
Which method is used depends on your industry, size, and purpose of valuation.
4. How often should I get my business valued?
Generally, every 2โ3 years or when a major event occurs: preparing to sell, bringing in new investors, estate planning, or dealing with disputes. In Oregon, businesses in rapidly changing industries (like technology or healthcare) may need more frequent valuations.
5. What factors affect the value of my business in Oregon?
Revenue and profitability trends
Industry outlook in Oregon and nationally
Customer concentration (whether revenue depends on a few clients)
Workforce stability and management team
Regional economic conditions (e.g., Portlandโs growth vs. rural market dynamics)
Goodwill and brand reputation
6. Does Oregon have any state-specific tax or legal issues that affect valuations?
Yes. Oregonโs lack of a state sales tax simplifies transactions but the stateโs corporate activity tax (CAT) and income tax considerations can impact value and deal structuring. For estate or succession planning, understanding Oregonโs estate tax thresholds is also crucial.
7. Can I use an online calculator to find my businessโs value?
Online tools can give a rough estimate but they donโt reflect the unique aspects of your business, such as customer relationships, local competition, or growth potential. For important decisions like selling or succession planning, a professional valuation is much more reliable.
8. How long does a professional valuation take, and what is the cost?
For small and mid-sized businesses in Oregon, a professional valuation usually takes 2โ6 weeks, depending on complexity and available financial records. Costs vary from a few thousand dollars to tens of thousands, depending on detail and purpose (informal estimate vs. full valuation for legal purposes).
9. Do I need a valuation if Iโm not planning to sell right now?
Yes. Even if youโre not selling, a valuation helps you track performance, secure financing, negotiate with partners, and plan for the future. Many Oregon business owners also use valuations for retirement and estate planning.
10. How can I increase the value of my business before a valuation?
Strengthen recurring revenue streams
Improve profitability and cash flow
Reduce reliance on the owner
These steps improve both short-term value and long-term sustainability.
