The Business Valuation aka What is My Business Worth?

If you’re like most business owners, you look forward to the day when you will be rewarded for your many years of dedicated effort with building your business, and increasing its value so you can sell it and enjoy financial freedom…but most owners overestimate the true value of their business and are disappointed when it’s time to sell.

The best way to know the value of your business is to hire a Certified Valuation Analyst (CVA) who is professionally trained and licensed to analyze and calculate the true market value of your business through a process known as a business valuation.

Simply defined, business valuation is a process of determining the current market value of a business as represented by its future economic benefits. The valuation of a business quickly becomes complicated, compounded by myriad factors that both positively and negatively influence its careful assessment and true monetary worth.

A business valuation can serve many purposes. These are among the more common reasons for conducting a business valuation:

  • Selling or acquiring a business
  • Establishing or updating a buy/sell agreement
  • Bringing in a new partner or new investor
  • Settling a divorce
  • Liquidating a business
  • Preparing for buying new or more insurance
  • Buying out a partner
  • Seeking business financing
  • Converting from a C corporation to an S corporation

Here is an example of how a Certified Valuation Analyst can facilitate a business situation.

When selling or acquiring a business, it is typical to find the buyer and seller in adversarial roles; the buyer wants the lowest possible price, and the seller wants the highest possible price. However, when the value of that business is professionally established by a valuation expert, both the buyer and the seller are supported in their contrary goals, comforted by the independent opinion of value qualified by an expert.

When determining the true market value of a business, no guesswork is involved; every detail is calculated precisely, and must hold up in a court of law or before a review by the IRS if mandated.

Knowing the true market value of your business today may prevent an unhappy surprise later. With enough time, and with the consultation, advice and planning of a Certified Valuation Analyst, there may be a variety of ways to improve your business before you are ready to sell, increasing its value …and your sale price.

To learn more about Joe Maas, view his Paladin Registry profile.

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