Different Situations Where You May Need Business Valuation
Business valuation is among the critical processes to ensure your business is on the right track. A business appraiser examines the company to determine its worth. And while most business owners only think about valuation during a sale or merger, there are many other instances where business valuation can be beneficial.
A time will come when you choose to retire or exit your company to focus on other activities. And when that time comes, you may wish to leave the company to a family member. Or you may decide to sell the company to a strategic buyer.
Whatever path you wish to take, business valuation is essential for determining the company’s true worth. That way, you and the successor can ensure the transaction is fair and equitable.
Additionally, you can use the report as a roadmap to increase the value by addressing any weaknesses that are adversely affecting value.
Many business owners need a Business Valuation for estate planning purposes. Estate and gift taxes are levied on the basis of the fair market value of the assets in the estate. When these assets include an interest in a closely-held business, it is necessary to have a valuation of the business interest. It is imperative to have a professional accredited third party business valuation filed along with an Estate and Gift Tax return.
Your company’s value can determine whether you qualify for a loan. Additionally, the amount of money you can borrow depends on the financial standing of your business.
A valuation report helps lenders and investors assess the value of your company before providing financing or taking an equity stake in your company.
When business ownership is part of a divorce, the business is often the largest marital asset. Furthermore, business value is generally the most disputed asset in terms of value, complicated by the fact that, as a privately held entity, there is no readily available market pricing for the shares.
Utilizing a Business Valuation expert to appraise the value of the business is often the most equitable way to establish the true value of the business.
Mergers and Acquisitions
When one is considering selling a business, a business valuation enables you to better understand the realistic value of your company and confirm in advance whether selling the company would enable you to achieve your financial goals. A business valuation provides a business owner with an accurate tool that allows the owner to make an informed decision about the viability and timing of the sale of their business.
Disputes may arise between partners or family members regarding the value of a business. In such cases, companies may opt to merge, dissolve or transfer.
Business valuation comes in handy to determine the actual worth of a company before any such decision is made. The valuation report also provides an objective basis for parties to resolve disputes and make informed decisions.
From the above, business valuation can benefit any business disruption, dissolution, or transfer. Whether you want to exit your company, plan your taxes or resolve disputes, a business valuation report will provide the objective assessment you need.
Sun Mergers & Acquisitions and our sister company, Sun Business Valuations have been providing reliable valuation services for over twenty years. We understand the various factors that impact business value and can advise you on the best steps to maximize value and ensure fair outcomes. Contact us for a consultation.