Business owners usually don’t take time to step back and assess the value of their company until a possible merger/acquisition or retirement. However, an objective, professional business valuation can be useful for many reasons.
Taxable events such as estate & gift taxation, charitable contributions and determining S-corporation election status
Legal issues, including disruption of a business, dissenting shareholder actions, economic-loss analysis, partner disputes and marital dissolutions.
Management support in financing, bankruptcy, liquidation/reorganization, succession planning or strategic planning
While business owners probably have a firm opinion about their company’s value based on profitability and potential, a banker, buyer or IRS examiner may not share the same perception.
To gain an accurate, independent perspective, the expertise of a certified valuation analyst (CVA) may be needed. A CVA can help determine value in several ways.
One method is based on expectations of future profits, and forces a business owner to pay attention to such factors as trends in sales and profits, and expectancy of return. Another method uses the appraised value of assets at a specific point in time. A third method is based on establishing a relationship between the business being valued and market indicators from public companies and recent sales of similar companies in the marketplace.
Source: Bruner-Cox, (330) 376-0100 in Akron or (330) 497-2000 in Canton, www.brunercox.com
