When you sell or merge or buy your business, it is CRUCIAL to have a business valuation. You may be aware already but it is important to note its significance. A valuation will create an astronomic advantage when it comes to negotiating and striking a fair deal. Even when buying and selling assets (real estate, equipment, vehicle fleets, trade secrets)
A succession plan isn’t a retirement plan. Whether you are restructuring your business, closing it, or selling when you have an up-to-date valuation in your hands, you can create a more strategic and informative plan of action, you can even increase your retirement package.
If you’re going through a divorce and begin dividing personal assets and liabilities, your business will most likely be part of this lengthy process. As a business owner, your company will be considered an asset. Your spouse may be entitled to half of the value. Having a valuation can ensure you are prepared to tackle such a challenge.
The death of a business owner could leave a business feeling vulnerable, and the remaining owners may need to purchase shares. A qualified appraiser can determine the fair market value of those shares.
When an owner wants to leave the business it is the same procedure as when a death of a business owner occurs. The shares are divided among the owners remaining after an appraisal and the determination of the fair market value of the owner’s interest.
If you’re thinking about adding a new owner to the team a current business valuation will help you determine and execute a reasonable buy-in price.
If you have plans to grow your business, whether that’s opening a new location, launching a new product, or expanding your existing facilities you may need the help of a lender or an investor. For credibility, statistics, and competitor analysis it is important to have a valuation.
By obtaining a valuation for your business you’ll understand just how much insurance you need in order to cover any life insurance buy-out agreements. Or, if a natural disaster strikes and your business is damaged in any way, you’ll know how much you can claim.
When estate planning or planning other transfers valuation is necessary this includes transferring shares via gifts, making transfers to certain trusts, or using stock-based compensation. In addition, there are significant reporting requirements that require valuations. small business valuation