If advisors want to add value, then they should know their own valuations, according to the founder of a fast-growing fintech firm.

In the future, the business of evaluating businesses will likely require some blend of both technology and the savvy of financial advisors, says Michael Carter, CEO and president of tech firm BizEquity.

“Where the business owner market once represented 10 to 15 percent of advisors’ book of business, moving forward it will be 20 to 25 percent,” says Carter. “The number one target for advisors, wealth managers and insurance representatives is getting more business owners in as clients.

“Technology gives them tools to prospect for, engage, serve and retain them as clients,” he says.

Based in Wayne, Pa., BizEquity is a cloud-based business valuation platform. The company has established partnerships to offer its tools to insurance companies, independent advisors, other fintech platforms and diversified financial firms. Via its partnerships and direct business with owners and partners, BizEquity has provided valuations for more than 33 million businesses so far.

After founding the company in 2011, Carter initially courted financial firms as primary clients, but then he found greater success appealing directly to business owners and client-facing advisors.

More than 1,200 advisors now use the offering to evaluate the businesses of their clients, their prospects and themselves. Moving forward, Carter pictures the advisory channel as a continuing source of growth for BizEquity. To that end, he has created a goal of reaching 30,000 advisors within the next four years.

“We’re going beyond offering advisors a key piece of information that they need to serve their clients,” says Carter. “We’re going to use valuations to help them prospect smarter and gain insight about potential new clients and to help them make better recommendations and retain the clients they already have.”

BizEquity offers valuations for any size business using a cloud-based, big data-driven system that delivers results in minutes. More than two dozen performance indicators are tracked by BizEquity, including cash flow to revenue, debt to income, income to revenue and return on equity.

Many financial industry and technology executives note that independent advisors often have difficulty ascertaining their own firm’s value—yet many of their clients are business owners whose own retirement plans involve an eventual transition and liquidity event.

“Most people, advisors included, are uncomfortable reading balance sheets and cash flow statements and extrapolating a valuation,” Carter says. “We’re democratizing the process.”

Carter says his platform now helps advisors find and engage new clients and differentiate themselves by providing business valuations in fewer than 10 minutes.

Of the more than 200 million businesses in operation globally, fewer than 2 percent value themselves annually. Over the next 10 years, approximately 10 million businesses will change ownership, according to BizEquity, but 75 percent of small business owners don’t know what their business is worth.

Carter’s bet with BizEquity was that advisors were likely interested in getting a traditional business valuation but had been put off by the expense, time and invasiveness. According to Carter, traditional business valuations can cost as much as $8,000.

The company says advisors should seek out business owners as ideal clients. It presents statistics showing that the average business owner or partner has $1.2 million in investable assets. If the average client relationship were to last 8.5 years and if an average fee of 75 basis points were charged, a business owner client could bring an advisor approximately $82,500 in revenue.

Advisors also have a fiduciary duty to understand their clients’ finances in a holistic context, notes Carter, and doing so would be difficult without knowing the value of their business.

Business owners often hold mistaken assumptions about their business’s value, he says; technology companies often overvalue themselves while retailers, manufacturers and professional firms don’t value themselves highly enough.

The lack of knowledge puts small and midsize business owners at particular risk, says Carter, as they are unaware of how to create the right capital structure for their business, what amount of insurance to buy or how to plan for a business transition into retirement. According to BizEquity, 50 percent of small businesses are uninsured.

“Advisors should be able to answer whether their clients’ businesses need more insurance or to seek a different source of financing,” says Carter. “This kind of information can also help determine whether the client needs more insurance or a different portfolio allocation or a new retirement plan.”

According to BizEquity, more than three-quarters of business owners plan to fund 100 percent of their retirement through the sale of their business.

At BizEquity, every time business owners or advisors use the firm’s tools to determine a valuation, the information they input is added to the trove of big data the software uses to make its calculations. Thus, as the company finds more partnerships and attracts more users, its products become more sophisticated and more powerful in the hands of financial advisors—and the company has added several significant partnerships so far this year.

In April, the company added a significant carrot for advisors when it incorporated 5500 benefit plan data into the Advisor Office platform. With that information, the company helps advisors identify opportunities in the booming small and midsize retirement plan advisory space.

BizEquity’s capabilities grew even more sophisticated in May when the company announced it was expanding a partnership with Equifax. The latter offers BizEquity’s valuation estimates while BizEquity incorporates Equifax’s data into its processes. Together, the companies have created the “BizEstimate” score, which helps client companies identify their need for insurance and financial products using their valuations, locations, industries and other inputs.

Via the Equifax partnership, BizEquity will also add financial and business details on more than 80 million companies to its database, allowing it to “pre-value” businesses for advisors.

Moving forward, BizEquity will layer artificial intelligence capabilities on top of its big data-driven valuations. That will help advisors provide specific advice to business owners on how to grow the value of their businesses, says Carter.

“We’re also moving beyond business data and business valuation data into personal wealth data, which will open up additional prospecting opportunities for advisors,” says Carter. “We’re also in development of a business valuation institute, where we’re going to launch a professional designation and an online learning experience to help advisors learn more about business valuations and earn the designation.

Starting at $299 per month, BizEquity offers three options for its advisor-facing valuations tool. An “Advisor” package is accessible by one user, creates a branded site for the advisor and allows him or her to search 100 prospective companies per month and create 20 individual reports per year. The “Office” package allows three advisor users and one administrative user, creates an office-branded site and a client-matching network, and provides 300 searches per month and 60 reports per year. The “Enterprise” package enables custom user counts, multiple branded sites, custom report counts, unlimited searches, integration services and a higher level of support.