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In today’s advantageous market, many business owners still leave substantial money on the table when they sell their companies – most often because they do not truly have a handle on their company’s value.
Why is Valuation Important to You?
The valuation process is a true asset to the business owner and a thorough, professionally prepared valuation will assist them in:
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Helping identify the key value drivers, major strengths, and more importantly, the major weaknesses of a company allowing the owner to solve both obvious and hidden problems prior to the selling process.
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Determining a reasonable selling price. Many owners rely on general rules of thumb, casual advice from friends, or other similarly unreliable sources. Values determined by general multiples or rules of thumb may be too high or too low. Unless the business owner goes through the valuation process, he or she just will not know. If the owner’s expectation of value is too high, it will prolong the selling process until a price concession is made. If the price is too low, money is left on the table.
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Fully understanding the value of the business will assist during negotiation. In this market, one can expect buyers to be sophisticated and experienced. They will conduct a rigorous analysis of the company even if the seller has not. They will look at those factors and value drivers that the owner and his advisors should consider in valuing the company, and they will use that information against the seller in negotiations if allowed.
Uses for Business Valuation
Many events may trigger the need for an independent valuation:
- Provide Fair Market Value of a Business as of a Specific Date in Time.
- Annual “business check-up” for business owners to determine financial strengths and weaknesses.
- Benchmark comparison for business owners to determine how the business is operating compared to other similar businesses in the same industry (regionally and nationally).
- Acquiring expansion capital through lending institutions and venture capitalists.
- Business Planning and Value Enhancement - Determining the present value of a business and setting goals over a period of time to increase that value.
- Valuing company stock for the development or annual review of an employee stock option program (or bonus stock option plan)
- Retirement planning
- Merger or Acquisition (Buying or Selling a Business)
- Planning for an initial public offering of stock
- Conducting a major strategic-planning initiative
- Seeking outside investors
- Disputing conclusions of an IRS audit
- Doing estate or gift planning that involves company stock
- Creating a company stock-option plan or other benefit plans that involve company stock (such as ESOP or ESOT)
- Breaking up a partnership (Partner Buyout)
- Getting a Divorce
- Entering Bankruptcy
Sunbelt Valuation Solutions
We have several valuation options available. If you are interested in learning more, please fill out your contact information and check the valuation solutions you are interested in.
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