At various stages in their development, businesses need to get a clear picture of how much they are worth.
Such evaluation is important if a company is to take stock of where it stands vis-à-vis its peers, and crucial if the venture intends to raise funding. Measures to value the financial assets and tangible and intangible worth of a firm are constantly evolving.
While big corporates can hire top-level consultants for an appraisal, small and medium sized firms need affordable, yet simple and effective solutions.
One such service is BizEquity, a leading provider of online business valuations, founded in 2010 by Michael Carter, a former venture capitalist.
Headquartered in Wayne, Pennsylvania, BizEquity created the first online business valuation platform, Valuation as a Service (VaaS), and has valued more than 27 million businesses with annual revenues that range from $50,000 to $100 million.
The algorithm-driven valuation platform holds seven patents, with several more pending. The quality of evaluations is continuously improved by benchmarking against previous appraisals and subscriber feedback.
Early last year, buoyed by the success of the service in the US and the UK, the promoters decided to set up shop in Singapore; the business is located in Blk 71, National University of Singapore’s innovation hub. Naman Shah, the market lead for BizEquity in Asia-Pacific, says the cloud-based platform offers small and mid-sized business-owners a reliable, user-friendly way of ascertaining what their business is worth, and at a fraction of the $8,000 it would normally cost.
Reality check
“The BizEquity service costs users $39.99 a month, for which clients receive 365-day access, unlimited valuations for one company, a dashboard, 20 key performance indicators and a 30-page report,” said Shah.
“The results are also available within minutes of their putting in basic data about the business online in a simple, seven-step process. Traditional business valuation firms usually take 4-6 weeks to complete the process,” he added.
Of the 200 million businesses in operation across the world, only 2 per cent evaluate themselves annually.
This is set to change, with key drivers being the demand for credit-related information, increasing corporate M&As, a rising number of business owners looking to retire in developed economies such as the US and the UK, and stronger economic growth in the US, the UK and Asia. BizEquity CEO and Founder Michael Carter says: “Asia is the most dynamic market today for small business growth. BizEquity believes business valuation knowledge is a global opportunity and we exist to help small business, so Asia is a natural. As markets become more transparent, so will knowledge. And BizEquity democratises this knowledge.”
Clearly, investors see value in such democratisation. In early October, BizEquity raised $5.1 million in Series A capital from London-based boutique private equity firm Frost Brooks.
Underscoring the importance of business appraisal, Miles Frost, managing partner Frost Brooks, said: “The opportunity BizEquity has is to make available global valuation knowledge with local context to businesses around the world. Just look at how entrepreneurial India and other Asian countries have become — there is a huge drive towards starting businesses and disrupting established antiquated processes. Those businesses should be in touch with what they are worth — and to do that well requires a global perspective.”
David Gulian, Co-Founder and Chairman, Logistar Solutions, says: “BizEquity literally saved me $8.24 million by showing me my true value. Prior to BizEquity my investment banker said I was worth 50 per cent less. Using BizEquity helped me understand my valuation so I changed my investment bankers and sought the value we deserved. Ernst & Young bought my company for a price within 1.1 per cent of the value the BizEquity report and dashboard told me I was worth. Simply amazing.”
Business model
Apart from offering direct services through its own portal, BizEquity adopts the white-label model. Says Shah: “BizEquity white-labels its service for financial service providers and business coaches. We have over 25 such white-labels, including metro.bizequity.com, actioncoach.bizequity.com and insmark.bizequity.com.” He added: “In less than six months, we have been able to attract good traction and are in talks with top financial institutions in Singapore. We have close to half a dozen white-labels ready for launch in Q1 of 2015. Next year our focus will mainly be Singapore and Indonesia.”