Business owners often seek valuations when they are considering selling their companies, but there are many other reasons to get a valuation. For example:

  • If one owner or shareholder wants to exit the business before others do, a valuation can help establish the buyout price.
  • If a business owner is in the process of divorce, a valuation is usually necessary to determine an equitable division of assets.
  • When owners need to prioritize capital spending and business improvements, obtaining a valuation can help determine which expenditures would add the most value to the company.

Estate planning is another strong reason for obtaining a business valuation. Whether the business will be passed to the next generation of family owners or sold as part of the estate, its value as a piece of the owner’s estate is an important factor.

  • Management buyout & succession planning – Key persons in the business may want to continue the business once an owner decides to retire. A fair price or range of value is determined so that both the buyer and the seller negotiate the price and terms of an actual deal.
  • Divorce – A valuation helps determine an equitable division of assets during marital dissolution.
  • Estate planning – Knowing your business’ value helps determine whether your estate will be subject to federal or state estate taxes. A valuation allows you to implement strategies to minimize or defer estate taxes, such as gifting shares during your lifetime or setting up trusts.
  • Selling a business to a third party – Business valuations help owners sell their businesses with confidence, attract qualified buyers and increase the chances of achieving a best-scenario deal.