Who Is BizEquity?Â
Founded in 2010, BizEquity® is the world’s first, leading, and largest online provider of business valuation knowledge and big data for private business owners and entrepreneurs. BizEquity® has valued over 29.4 million businesses. Headquartered in Wayne, Pennsylvania, but with a global footprint, BizEquity® has offices in Singapore and Canary Wharf, London.
BizEquity® is on a mission to make business valuation knowledge accessible to businesses worldwide. With the largest online business valuation cloud-based software product and service, and an extensive database, BizEquity's® patented platform is used by over 750 financial services firms and 4,000 advisors, including TD Bank, UBS, and PNC and is endorsed by the American Bankers Association (ABA) https://shorturl.at/nrsKL
Acquired by ACBJ in 2019, a majority stake in BizEquity® is owned by American City Business Journals.
Are BizEquity Reports Certified?
No. BizEquity® valuation reports are not certified and should not be considered a traditional business appraisal. While they may follow similar methodologies and procedures as a professional appraiser and have similarly accurate results, BizEquity® cannot guarantee the completeness or accuracy of user inputs. As a result, any estimates should not solely be relied upon for transactional and IRS-related scenarios.
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The values generated by the BizEquity® software are general in nature, whereas a certified appraisal can provide greater assurance. Hardstone works with NACVA® Certified affiliates to deliver Certified Valuation Reports.
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Lastly, it's important to remember that every business valuation, regardless of whether it's prepared by a professional appraiser or software, is ultimately an opinion. While it should be based on accurate facts and accepted business valuation principles and procedures, it's important to recognize that it remains an opinion. In fact, many accountants and advisors agree that a company should have at least 2 independent valuations to get a more accurate range of value.
What Valuation Methods Are Used In The Software?
BizEquity® valuation algorithm is primarily classified as a combination market approach and income approach methodology. When valuing established firms, BizEquity® uses a "total market strategy" that takes into account both the seller's discretionary earnings (SDE), and revenues. For startup and high-growth firms, a modified discounted cash flow analysis model, developed by a venture capital company in Silicon Valley, is used.
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Importantly, the algorithm will multiply the revenues and SDE by the industry-specific, size-adjusted, and company-specific risk-reflective multiples within the system. BizEquity® then weights these inputs and outputs in accordance with generally accepted private firm valuation protocols.
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For profitable companies, greater weight will be given to the SDE multiple with less weight given to the revenue multiple; however, both are considered. For unprofitable companies (negative SDE), the system will generate estimates primarily based on a revenue multiple.
The BizEquity® System and Accuracy
BizEquity® has created an operating system and cloud-based platform for doing business valuations on private companies and has filed over 61 patents and inventions with a total of 7 granted patents currently. The platform was created with over $15 million dollars; 600,000 man hours of development effort, and over 10 years of development. It streams data from multiple data, comparable and performance sources and uses this data to hit against its patented business valuation algorithm.
The BizEquity® algorithm is based upon professional business valuation standards and revolves around both a Discounted Cash Flow (DCF) and Sellers Discretionary Earnings (SDE) methodology. It is unique in this hybrid approach and its proportion-based utilization of DCF if the company valued is a growth company and/or in select industries and SDE/Adjusted EBITDA if operated as a more traditional tax efficient business.
All multiples, discount rates and cap rates are industry-specific, size adjusted and reflective of myriad company-specific factors including growth, profitability, asset intensity and key risk factors such as customer concentration, degree of repeat clientele, importance of owner to day-to-day operations, and much more.
The BizEquity® system will produce valuation estimates that are generally within (+/ -)10% - 15% of the mean value expected if one were to hire 5 professional appraisers to value the same company with identical facts. Valuation is both an art and a science, with literally dozens of underlying assumptions needed to reach a conclusion of value. Any given assumption can impact “value” materially, up or down. In reality, the best way to view business value is in the form of a range, i.e. between X and Y. Because certain valuation purposes require a “point estimate”, they must often be relied upon.
A valuation opinion is not an “absolute” finding; rather it forms a basis for negotiation between opposing parties and their respective interests. This opinion or conclusion may be “point estimate of value” but is more accurately described as a “range of value.” Attempts have been made to turn this process into more of a science, but subjectivity always takes center stage. Valuation is and will always be one part science and one part art.
What Patents Does BizEquity Have?
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Engine, system, and method of providing Cloud-based business valuation and associated services US 8,630,884 · Issued Jan 14, 2014
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System and method for providing a plurality of asset and service valuations US 8,606,664 · Issued Dec 10, 2013
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Engine, System, and Method for providing cloud based business intelligenceUS 8,521,655 · Issued Aug 27, 2013
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Engine, system, method of providing third party business valuation and associated services US 8,468,075 · Issued Jun 18, 2013