Several times in the business growth cycle, a business could need a business valuation – sometimes there is a decision point looming and sometimes the valuation is a requirement.
The valuation can shore up planning for many transitions in the business –
When you’re thinking about selling your business in the future, or when have an offer now to evaluate, it’s helpful to get a non-emotional third party valuation to help direct your decisions.
For planning the exit strategy – whether for retirement, partner exit, or even for insurance to fund one of those in the future – the business valuation gives that logical basis to begin the discussion.
Know the value could impact how best to protect your position-
You may need to value a base of intellectual property, to complete the purchase price allocation for a buy-sell agreement, or to provide a straightforward amount for a partner divorce or death.
When defending in a lawsuit or for litigation support purposes, the valuation can assist in determining lost profits, uncover fraud, provide value for a shareholder dispute.
Some reporting requires the fair market value to be calculated –
To properly report the current value of the stock shares of the business for reporting on Form 5500, or to determine the annual share value for an ESOP plan report.
To value stock options, value a business for bankruptcy, or determine ongoing plans – whether to sell the assets separately or to see if the intrinsic value of the business is more beneficial.