The Times They Are A-Changin’ (Even in 409A Business!)
Valuation work is a highly specialized process. It’s for this reason that the work should be done by both the valuation expert and valuation technology tools.
In the last few years, valuation practice work has gradually changed due to advances in technology. Financial valuations are now typically performed by an independent third party expert, such as a business valuation firm.
Even the 409A valuation business has now changed to a Software-as-a-Service model, where companies like AlgoValue, eShares and Capshare develop technology tools for this type of work. AlgoValue, however, is the only software company that addresses its products specifically for business valuation firms. The others sell their 409A services to startups and actually end up competing with valuation firms.
At AlgoValue, we believe that valuation tools – as opposed to simulation tools – are what should be used by business valuation professionals. The reason is that these professionals have the expertise needed to enter the data correctly, and build reasonable assumptions using the relevant tools (for example, company value, volatility and risk-free rate parameters).
There are obviously various concerns when using new technologies, such as accuracy of results, data privacy and the loss of human knowledge. AlgoValue is addressing those concerns by giving full transparency to results with graphs and formulas, using the most advanced practices for data privacy, and giving free technical support whenever professional questions arise.
The 409A business market is changing with the rapid increase of technological advances today. These technology tools are improving work efficiency, time spent on audit support, and the ability to compete with new service providers. This is exactly why business valuation firms should embrace new and innovative valuation tools, such as the AlgoValue 409A Wizard.