Business Valuation Software

Definition

Computer application designed to analyze a business in order to determine its economic value.

What It Means

Business valuation software is used by business people to calculate business value based upon one or more of the business valuation approaches. In addition to the obvious advantage of time-saving computer automation, business valuation software has a number of additional benefits:

  • It simplifies business valuation by performing a range of complex mathematical calculations.

    You can use business valuation software to appraise a business even if you lack the professional appraisal knowledge.

  • It helps organize the business appraisal process.

    You can get reliable business valuation results quickly by following an established business appraisal process.

  • It assists with communicating the business valuation results.

    Your business valuation reporting needs may include a printed report, an electronic PDF copy, an e-mail attachment or a Web page.

Business valuation software: the 7 elements of quality

Business valuation is part art and part science. To be useful, business valuation software tools must assist business people with making critical decisions, while performing routine calculations automatically. Here are the key elements that set apart quality business valuation software products:

1. Ease of use

Business valuation software that makes your life easier integrates a number of tools and resources into one easy-to-use package. You should have ready access to the tools you need and help on how to use them.

2. Power

Business valuation software should support a number of standard business valuation methods. Your tools must help you focus on the “big picture” of measuring your business worth – handling all the math details for you.

3. Flexibility

You can do your business valuation using a number of methods under the market, income, and asset business valuation approaches. No one method is better than another.

Market comparisons can be an excellent way to measure the value of a “main street” business. A start-up business can be valued using the Discounted Cash Flow Method. The value of an established asset-rich business may be appraised by the Capitalized Excess Earnings Method.

Your choices of which methods to use should be customizable and easy to make.

4. Extensive help system

If you are new to business valuation, understanding the right terms and concepts is very important. To save you time, your business valuation software Help System should provide you with a quick reference to the term definitions, explanations and examples of the tools.

The system should act as your Information Center by offering suggestions on how to calculate and interpret your business valuation results.

5. Accuracy of business valuation calculations

Needless to say, the credibility of your business appraisal relies upon the accuracy of your results. Business valuation software should offer you a choice of well-designed, standard business valuation methods.

The results you obtain by using well-established business valuation methods are likely to meet with acceptance from other business people and professionals.

6. Security of critical business data and your computer systems

Business valuation involves analysis of sensitive business data. Your business valuation software should safeguard privacy and security of this data and support its communication to the right people.

Your laptop or desktop computer should be protected against malware at all times. To ensure this is so, your business valuation software must be signed by a code signing certificate issued by a major security authority or, in the case of Mac computers, Apple, Inc. Your Windows computer uses the Authenticode® technology and Mac computers are equipped with the Gatekeeper® to:

  • verify the identity of the software publisher
  • ensure that the software product is free of computer threats
  • and check that the software has not been tampered with.

7. Cost of ownership

State-of-the-art business valuation software should help you measure your business value – without breaking the bank.

Modern technologies, such as Open Source, help make your business valuation software far more powerful and cost-effective when compared to older proprietary systems.