Business owners should have a valuation performed when considering selling their business, but there are many other reasons to have a recent valuation.
Why do you need a Business Valuation?
- What happens to the business if you die or become disabled and can’t run the business? A current valuation can assist your family with the sale or dissolution of the business.
- Buy/Sell Agreements: An agreed upon value of the company is a starting point for avoiding disputes.
- New Partner or Shareholder: If you want to add a partner or shareholder you need to know the value of the company for the buy in price.
- Sale of your company: Having a current valuation of your company gives the potential buyer a reasonable estimate of what your company is worth.
- Exit of Partners or Shareholders: When partners or shareholders leave a company, a valuation will be a basis for how the settlement should be structured.
- Exit Strategy Planning: If you’re planning to sell your business a valuation gives you a baseline value and can help in developing a strategy to increase the value of the company.
- Gift Tax Planning: A valuation gives you a defensible and documented value of the company should the IRS dispute values.