Knowing the worth of your business is essential for small business owners for any number of reasons. In many cases, your most valuable asset is the business itself. But when it comes to figuring out exactly what your company is worth, it’s not as easy as just looking it up online. A formal, proper business valuation involves a professional process to look at all the ins and outs of your business to figure out precisely what it’s worth.
When would you need a business valuation, and how do you go about getting one? We’ve covered all you need to know below:
When Do I Need A Business Valuation?
There are plenty of reasons why you might need a solid idea of what your business is worth today. These include:
Changes In Business Ownership
If you’re planning to retire or passing on ownership to a partner or a child, you’ll need a complete valuation of your business as part of that process. Of course, it’s best practice to know your business value anyway, but it’s particularly essential if your company is changing hands.
Merging Or Selling Your Business
To sell your business, you need to know its worth. A valuation provides both the seller and buyer with information about how much the company is worth presently, making the process of selling or merging easier without keeping anyone in the dark.
Gifting Shares For Succession
Suppose you’re gifting shares of your business as part of a succession plan. In that case, whether it’s to family members, children, or anyone else, you’ll want to complete a full valuation of your business. This is a must for succession plans in general as part of your preparation for leaving.
Providing Information To Potential Investors
If you’re looking for people to invest in your business, they will want to know what it’s worth and whether it’s a good choice for them. Your valuation allows you to provide that information clearly and effectively, so investors can decide for themselves if you’re the best investment for them.
Division Of Assets
In divorce or separation, you’ll need to have a full valuation of your business to ensure assets are divided fairly.
For Tax Purposes
For estate tax purposes, you’ll need a full valuation of your business and any assets involved in it for accurate and proper reporting.
How Do I Get A Business Valuation?
If you need the full value of your business on paper for any reason, seeking professional help is the way to go. With complex processes and calculations required to reach a final valuation, it’s not something you can simply DIY in most cases. At Congevity, we have experience in all avenues of business planning. In addition, our industry connections mean we can ensure your valuation is completed to the highest standard, whatever your goals or purpose.