Whether you own a start-up business or a seasoned enterprise, your business must be evaluated to determine its value today as represented by its future economic benefits.
You can see that the valuation of your business can quickly become complicated, and is even further compounded by the multitude of lenses through which the valuation can be measured.
Should your business valuation be conducted using the income method, or the market or asset methods? Which one of these methods is the best choice for your circumstances? How do such influences as economic trends, industry factors, regulations, competition, and intangibles affect the value of your business?
This is why you will need the advice of a person professionally trained in business valuation, such as a Certified Valuation Analyst (CVA). While certainly not an easy task to complete, trained professionals who know how to work closely with you to identify the financial strength of your business will expertly guide the valuation process to the best conclusion for your purposes.
What is your purpose?
What is the reason for your business valuation? We call this ‘defining the engagement’, and like most first steps, it sets up the subsequent pathway of our work together… this is the first important detail.
Among the more common reasons for conducting a business valuation:
- Selling or acquiring a business
- Establishing or updating a buy/sell agreement
- Bringing in a new partner or new investor
- Establishing an estate tax planning or gifting tax planning strategy
- Settling a divorce
- Liquidating a business
- Considering providing stock options
- Preparing for buying new or more insurance
- Buying out a partner
- Seeking business financing
- Establishing an Employee Stock Ownership Plan (ESOP)
- Considering making a sizable gift or supporting a charity
- Converting from a C corporation to an S corporation
Excerpt from Exit Insight: Getting to “Sold,” pp. 77-78
Copyright © 2014 by Joseph M. Maas. All rights reserved.
Maas and the Synergetic Finance team are business valuation experts. For more information on business valuations or exit planning, refer to author Joseph M. Maas’ new book Exit Insight: Getting to “Sold!” in which he explains how business owners can determine their firms’ worth and prepare for a successful exit.
To order your copy of the book, visit Merrell Publishing online or Amazon.com. Have questions about Exit Insight or Exit Planning? Want to schedule a call or plan an exit planning workshop with author Joseph M. Maas? Call Joe at 206-275-5455 or send him an email.
