Do you know what your business is worth? If you're like many business owners, you probably would like to know this beneficial information.
Even though business valuations can be time-consuming and costly, there are definitely instances when it's important to determine the value of your company. Here are a few circumstances where it might be worthwhile to have a business valuation.
Selling Your Business
Anyone considering selling a business should first have it valued. By doing so, you'll help ensure that you don't sell your company for less than it's worth. Plus, knowing your business's current value helps prevent you from setting the price unrealistically high.
The same holds true if you're selling a division, territory, branch, or product line. It's not uncommon to have a valuation prepared for just a segment of your business.
Looking to bring new partners into your business? Having your business valued by a third party is a fair way to set the buy-in price.
If you already have partners in your business, you should have a "buy-sell" agreement in place, detailing what happens if one of the owners dies, becomes disabled, retires, or wants to be bought out. Generally, buy-sell agreements dictate when and how your business needs to be valued.
Business valuations are also a key ingredient in your succession planning. Without knowing the fair value of your business, how can you ensure that there will be enough liquidity to allow for a smooth transition to your successors? Plus, if you're gifting shares of your company to your family members, charities, or other people or organizations, being able to substantiate the value of the gifted shares is a must.
Depending on your upcoming plans for your business, it may be a good time to invest in a business valuation. Contact us for help determining what course of action you should take next.