A rise in business bankruptcies helped mitigate revenue losses during the recession
New York, NY (PRWEB) June 04, 2014
Business valuators, or appraisers, quantify the financial worth of companies of various sizes, from small proprietorships to large multinational corporations. According to the American Society of Appraisers, business valuation firms prepare transaction-based appraisals for mergers, acquisitions, initial public offerings (IPOs) and debt and equity financing; tax-based appraisals for estate planning, charitable contributions and granting of stock options; and litigation-based appraisals for bankruptcy, shareholder actions and breach of contract, among other reports. Revenue is garnered based on the number of hours the appraiser worked or a flat fee for the appraisal report. Due to the abundance of independent appraisers, nonemployers are estimated to account for the majority of industry revenue and establishments.
Over the past five years, demand for business valuation services has grown in line with corporate profit and access to credit, which has boosted both merger and acquisition (M&A) activity and the number of IPOs. In addition, steady increases in the number of adults aged 65 and older has prompted sales of businesses whose owners are reaching retirement. These events generally require industry services to determine the value of the businesses that are entering into sales agreements or issuing stock. Consequently, over the five years to 2014, IBISWorld estimates industry revenue to grow at an annualized rate of 3.3% to $7.4 billion. However, according to IBISWorld Industry Analyst Leah Goddard, “higher investor uncertainty due to rising interest rates may delay M&A or IPO plans in 2014.” Combined with a decrease in the number of bankruptcies, which usually necessitate a business valuation firm to help with restructuring, industry revenue is forecast to decline 0.4% in 2014.
In the coming years, industry operators will benefit from an improving investment environment and rising corporate profit. “The growing number of baby boomers who are reaching retirement age and looking to sell their businesses will also increase demand for industry services,” says Goddard. As more appraisers enter the industry in response to revenue growth, pricing competition between firms will be a significant concern. To mitigate the impact of lower fees on profit margins, firms are expected to become increasingly specialized. Over the five years to 2019, IBISWorld estimates revenue for the Business Valuation Firms industry will increase.
For more information, visit IBISWorld’s Business Valuation Firms in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in the Business Valuation Firms industry estimate the value of an owner's interest in a business. Business valuation firms are used to determine how much an entity is willing to pay to buy a business or receive to sell a business. Business valuation can also be used for other legal and business purposes.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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