While it is never a bad time to update the value of your company, here are a few of the more important reasons to do so:
Purchase or Sale
Whether you are considering selling a business or have an interest in acquiring one, obtaining a certified, independent valuation should be at the top of your to-do list.
Transfer of Ownership
One day, you realize it is time to consider retirement and develop an exit strategy, while allowing a key employee or family member to take over. To properly transfer ownership in this type of transaction, a business appraisal is required to accurately reflect value and determine a fair process to accomplish this ultimate business goal.
Partner Dispute and Divorce
In either situation, a dispute can become combative, with both sides seeking fair treatment in the process and on their own terms. In all likelihood, the parties will have different opinions; therefore, engaging an experienced, certified appraiser to resolve and negotiate the terms more effectively is a wise decision.
Estate Settlement
When a business owner or senior partner passes away, it can become complicated, especially when there are multiple investors and heirs to the business, who may have different goals for the settlement of their shares. Some may want to liquidate, while others might decide to continue and take over operational control. Determining partial ownership interests through an independent appraisal will help address these issues so the business and shareholders don’t suffer.
Merger/Acquisition
If your business is being combined with another as part of a merger or acquisition, the due diligence process will involve an appraisal of the company and its underlying assets. There are formal accounting principles and guidelines in place to complete this effort that an appraiser will follow to ensure the transition goes smoothly.
Liquidation
There may come a time when the business is not operationally profitable, and you decide to sell the assets on an as-is, where-is basis, in this case. Understanding and estimating the value of these tangible and intangible assets will be critical in this circumstance.
In summary, regardless of the reasons for a business valuation, it is always a good idea to better understand the current value from an unbiased perspective. Take the extra time to work with a professional appraiser to accomplish this goal.