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Understanding the valuation of the business is critical to the owners of closely held business in planning and management.
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Closely held business owners typically have most of their personal wealth tied up in their company, but rarely know the current value of the enterprise.
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Current valuation data is important for strategic planning, dispute avoidance, insurance purchases and tax compliance.
Understanding the value of your business is critical to the management and operation of a business, to protecting the value of the business, and to planning for the future. Many owners see valuation as an issue that you need to look at at certain stages in the life of the business—wwhen someone dies or gets divorced, when it’s sold, or when there’s a tax issue.
That value, however, doesn’t consider other, crucial reasons why valuation is necessary for the business owner. The reasons are both defensive and offensive. For example, you cannot know how much insurance you need for your business if you’re just guessing about what it’s worth. You need this information for the defensive purpose of protecting your investment.
Tools that You can Use
How much is your business worth today?
You can get an immediate estimate of a range of values here.
We counsel clients on the valuation issues in their business. Contact me with with questions.
Offensively, business valuation is a strategic tool that offers insight, guides decisions, and uncovers opportunities for growth.
Business owners, on average, have about 80 percent of their personal assets tied up in their businesses. But only 30 percent of the owners of closely held businesses have a clear picture of what the business is worth. Continue reading