Do You Value Your Business?
As a family business owner, you should know what your business is worth. It is important to consider how marketable your business is, when you should plan for succession and who the successor will be, clearly understand your options for retirement and when to incorporate an estate plan to transfer the wealth without significant tax impact. With this in mind every family business owner should know the value of the business.
Unfortunately, many family business owners only consider the importance of a business valuation when they want to sell. But like your goals, your business plan, and marketing plan, a business valuation should be current and reviewed periodically.
Regardless of the reason, the stock price of your privately held company is not readily determined unless you have a current up to date business valuation.
There are three approaches behind a business valuation:
The income approach – a technique that determines fair market value
The market approach – estimates the value based on prices obtained in market transactions of similar businesses
The cost approach or adjusted book value approach expresses the value of the company as a function of it’s underlying assets.
The valuation of a closely held business can be beneficial to the family business owner for many reasons. Not only can the owner learn the value of the business, but they have an opportunity to analyze and review operations on a micro and macro level. Therefore, the business valuation can be used for strategically as well as for succession purposes.
Protect yourself, your family and your business and have a business valuation that is current and on hand at all times.
We value your business! Do you?
