Are you looking for investors to jump on board to propel your business in a new direction or maybe want to sell it to take on a new adventure? Perhaps you are busy with succession planning for your business due to possible retirement or planning for estate duty purposes for your estate. Or are you part of a significant business restructuring to streamline and expand operations?
Chances are highly likely that you will need to determine the value of your business! A business valuation is a process where a value is placed on a business or a business unit, based on the business’s historical and projected financial performance.
It is critical as a shareholder or business owner to know what your business is worth when making business decisions and maintaining an ongoing business strategy. These decisions can include evaluation or negotiating a possible sale of the business or a portion thereof or planning on restructuring the business by merging into an existing business or acquiring another.
It will also help when negotiating with potential investors and financial institutions to raise capital. Business worth is also vital for individuals with a direct interest in such businesses to do proper estate planning or in the unfortunate event of marital dissolution.
The valuation of a business unit is a complex affair and different methods can be used to value a business. Depending on the size of the business, its’ assets and industry information available, the following valuation methods can be used:
At some point, you will most likely find a need to place a value on your business. Do not try to figure it out on your own. Reach out to you trusted advisor to assist you with business decisions where a value needs to be placed on your business not only to maintain business strategy, but also to calculate the value of your business by using the appropriate valuation methods.