Who Needs A Business Valuation?
By Mary Grace MusuneggiRecently I read an article by Steven Parish, contributor to Forbes Magazine, called “If You Value Your Business, You Should Value Your Business.” In it, he argues that “business valuation is a process done by professionals, but it’s a product the business owner needs to understand.”
We couldn’t agree more, and we encourage all business owners to meet with us for a complimentary informal Business Valuation. For most individuals, their largest asset is likely their home or their 401k plan. For business owners, however, the largest asset they have could be their business. More importantly, their business is their source of income and probably an asset that will be part of their retirement planning.
Now it may seem like you do not really need to value your business until you are ready to sell it or ready to retire, but as with any asset, knowing its value comes in handy more often than you might think.
What if someone makes you an offer for your business? What if you become disabled, die, file for divorce, or decide to buy another business? What if an employee eventually wants to take over or buy into the business? What if you are preparing to take a business loan or expand the current business? What if you are designing a buy-sell agreement or doing your Estate Planning? How do you know if the value of the business has grown over the last year?
All of this is even more important if you are a family owned business. “Family owned” might sound like it just means you have employed your son and your daughter, but your business qualifies as family owned if the business comprises more than 50 percent of your total estate and you pass the estate on to a “qualified heir.”
Determining the value of your business is also a key step in your Estate Planning process. Because the business is part of your estate, the valuation is needed to estimate the estate taxes; this helps you to calculate the cash or liquidity needed to administer the estate.
Don’t wait to find out what your business is worth. Find out now, so you’re prepared for whatever changes lie ahead. To learn more about determining your business’ value, contact us at 412-341-2888. We are happy to meet with you to answer your questions and get you started with a complimentary informal Business Valuation.