Business owners in Odessa, Texas often ask how to build value in a company along the road of building the value of a business. It is necessary and indeed appropriate to examine the business in a variety of ways. One of the best ways to do this is through a business evaluation, by a professional like Caprock Business Consulting. Each business valuation provides unique perspectives and insights into how an Odessa business owner is proceeding along the path to grow the value of the business. If and when it may be ready to sell, most Odessa business owners realize the obvious events that may require a formal business evaluation, which include the potential sale or acquisition, shareholder dispute, death of a shareholder, gift or estate tax, transfer of ownership, et cetera. A formal business evaluation can also be useful to a business owner when examining internal operations. So the question becomes, how do Odessa business owners evaluate their businesses?
How can Odessa advisors and formal business evaluations assist owners examining their businesses? There are at least six ways that they are important regardless of the size of the business. All six of these should be contemplated with an informal business evaluation. Number one. At a point in time, the balance sheet in the current period, whether it be month or quarter, provide a reference point if that is the only reference point. However, one never really has any perspective on what is happening to an Odessa business. Number two, relative to itself, over time, business exhibits trend in performance that can only be discerned and understood if examined over a period of time, often years. Number three, relative to Odessa peer groups, many industries have associations or consulting groups that publish industry statistics. These statistics provide a basis for comparing performance relative to companies like other Odessa businesses relative to budget or plan.
Caprock Business Consulting recommends every Odessa business of any size should have a budget for the current year. The act of creating a budget forces management to make commitments about expectations of performance in light of a company’s position at the beginning of the year and its outlook in the context of the Texas local economy, industry and or national economy. Setting a budget creates a commitment to achieve, which is critical to achievement. Most financial performance packages compare actual to budgets for the current year. Number five relative to your unique potential area. Every Odessa business has prospects for potential performance if things right and if management performs. If a company has grown, say for example 5% per year in sales and earnings over the last five years, that sounds like good on its face. But what if the industry niche has been growing at 10% during the same year? Wouldn’t an Odessa business owner want to know?
Relative to regulatory expectations or requirements would be number six. Increasingly, companies like Odessa businesses in many industries are subject to regulations that impact the way businesses are performed and how profitable they may become.
So why is it important to use a business evaluation for an Odessa business in these ways? Well together, these six ways of examining a company provide a unique way for business owners and key managers to continuously reassess and adjust their performance to achieve optimal results. A formal business evaluation by a partner like Caprock Business Consulting can communicate the company’s current position in the Odessa, Texas market in many of these areas.
Successive frequent business evaluations, allow business owners and key managers, the opportunity to measure and track the performance and value of the company over time against stated goals and objectives. Odessa attorneys also often ask about business evaluations for litigation support services and how Caprock Business Consulting may be able to assist them as business evaluation specialists. Caprock Business Consulting provides support for attorneys working on cases involved in business evaluations for marital dissolution when a business evaluation is called for in an evaluation related dispute, we provide necessary opinions of value. If the case involves corporate damages, Caprock Business Consulting can provide the necessary opinions regarding alleged damages. These services are fairly obvious for the use of Odessa based businesses pertaining to litigation. The focus of this, however, is on some of the not so obvious services that businesses evaluations and business evaluation professionals can provide in the context of business oriented litigation. In Odessa litigations involving business evaluations where economic damages issues business evaluations professionals like Caprock Business Consulting are capable of providing a surprisingly broad assortment of litigation support services.
These services can begin before a decision is made to file in a litigation and can continue throughout the discovery deposition, trial preparation and trial process. Odessa attorneys are increasingly learning that the effectiveness of a business evaluation in damages related litigation support services are enhanced by retaining experts such as Caprock Business Consulting as early as possible in the process. In litigation matters, business evaluation professionals are often assigned to multiple tests including determining the value of a business of a given basis, whether it be fair value, fair market value or value as prescribed by a buy sell agreement could be measuring the amount of economic damages alleged by or incurred by a plaintiff or it could be consult with legal counsel with respect to business and evaluation issues, which may include the review and analysis of reports prepared by other business evaluation professionals. These assignments are customary not only to business evaluation professionals but also to Odessa litigators handling matters which involve issues of business evaluation or economic damages.
However, the toolbox of business appraisers includes a number of not so customary litigation services or additional services that are only beginning to be considered by litigators in the Odessa area, including the analysis of the work product of other Odessa business evaluation experts prior to the filing of litigation, analyzing alleged damages prior to the filing within a Odessa litigation court system. Mediation prior to the filing of litigation, assistance during the discovery process, preparation for deposition of other Odessa business evaluation experts or fact witnesses. Some Odessa attorneys request these services at the outset of the engagements, which is preferred. Others could potentially make their jobs easier and leverage their legal expertise by engaging competent business evaluation litigation support services earlier in the litigation process.