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How Do I Choose the Best Valuation Software?

Alex Newth
Alex Newth

Whether planning to sell a company, merge with another one or just get an accurate valuation report, business valuation software provides figures that allow a business owner to understand just how valuable his or her company is. The figures given by valuation programs are often used to detail for investors a company's profits or losses for the quarter. Important considerations when choosing valuation software are the ease of starting and using the valuation software, whether the valuation programs works for the specific business model, the ability to make financial forecasts, and available reporting functions.

Some valuation software is easy to pick up and use immediately, while other such software may have a learning curve. A program that is easy to pick up will usually offer easy-to-understand terms and allow the user to type information into fields without complicated procedures. Harder-to-use programs will ask for complicated data that new business owners may not understand. Valuation programs that are easy to start are better for new business owners but may not give as accurate a business valuation. The harder programs, which take every bit of information into account, usually offer more accurate reports.

Woman holding a disc
Woman holding a disc

Most valuation programs are made to work with a versatile range of business models and are typically based off income and cash flows related to all types of business. If the business model is new or if it does not follow the normal rules of business, valuation software may be unable to accurately generate a valuation report. Check the software and see what information it demands, and then check the business to see if that information is available.

Financial forecasts, based on current business information, make estimates several months or years in advance and show where the business should be if everything remains the same. These reports cannot be entirely trusted, because anything can happen to alter the business, but having a forecast will help investors understand where the business is going and will tell the business owner whether the business is working or if large changes need to be made. Valuation software with this function is desirable, because other programs won't need to be purchased for the same feature.

Reporting the business valuation is important, especially when the figures are needed for presentations. A valuation program that can make graphical reports or export the information to programs that can generate graphical reports will be better when it comes time to present the information. The report must also be easy to understand while providing a complete breakdown of all the information given.

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