Why do I need a business valuation?

August 3, 2017 Written by

This is a question I am often asked. The basic reason why you would want to value your company would be for two good reasons; you either are in a multiple partner business and it is part of a buy-sell agreement or if you are in fact ready to sell your business. In either case, you will need to determine your business’ fair market value as a starting point. Of course, obtaining a reasonably precise value for your business is often a complicated and time-consuming task. Accurate appraisals must weigh a variety of factors and incorporate numerous assumptions. The more precise the underlying numbers and suppositions, the more likely the appraiser’s determination of fair market value will reflect what a willing buyer would actually pay. Here are two questions an appraisal should address; how does my business compare and will present financial trends continue to either maintain, increase or decrease your value.

Remember: a valuation is merely a starting point. The more accurate the appraisal, the more likely the business will be priced correctly and potential buyers will be attracted. Unfortunately, determining the fair market value of a business may be fraught with missteps, faulty assumptions and emotional feelings. For those reasons, hiring a trained and objective professional is often a worthwhile investment..

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Written by: Doug Rodrigues