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Reasons to Value My Aviation Business: Part II

✈ April 19, 2017, Avicor Aviation Inc.

Reasons continued…

Last week we discussed three key reasons for knowing what your aviation business is worth. Just to recap:

  1. If you are planning to sell, knowing how much your business is worth provides you with a realistic understanding of what you could sell it for, and provides a starting point for discussions with a potential buyer;
  2. It allows for better corporate and personal planning; and
  3. It can be a very useful tool with bankers and financiers that don't understand the unique dynamics of the aviation industry.

But there are more reasons why you should know what your aviation business is worth.

Reason 4: Comparison

Part of the process of valuing your aviation business is to compare your overall financial picture with others in the industry. Do you know if your operating ratios are similar to others in the industry? Are you actually doing better, or worse? You may think that you are in a better or worse position, but perception is not everything. Comparing financial structures, debt loads, and other key factors can tell you if you are stronger or weaker than the rest of the industry. A valuation report can give you a good understanding of where you stand in relation to your competitors.

Reason 5: Improvement

Which brings us to reason #5: A valuation of your company can enable you to pinpoint areas in the business that could be improved. This is one reason that often gets overlooked.

In valuing a company, part of the procedure is to look closely at various financial ratios. Reviewing them closely can pinpoint specific areas that could be improved in order to increase the worth of the company. The analysis can identify areas that on the surface seem to be doing well enough, but when looked at more closely, have issues to be addressed. While generating more sales seems like the obvious easiest way to increase value, operating more efficiently may actually do more to increase its overall value. For example, is it taking too long to collect from customers? Or do you have excess capital that could be used more efficiently?

Next week we will look at a few more good reasons to find out what your aviation business is worth.


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