4 Reasons Why You Need a Business Valuation

Bank Manager Meeting With Female Owner Of Farm ShopAsk a small business owner to value their business and most likely you will get a value that is either too low or too high.  So why is it important that you get an accurate valuation of your business?  There are many reasons. The following are just a few:

  1. Determine when you can retire. If your business comprises the majority of your net worth, determining a value of the business will give you a better idea as to when and if you can retire.
  2. For lending purposes. If you anticipate looking to third parties to borrow capital for business purposes, those lenders may require a business valuation.  Sometimes timing is everything and if you are not prepared you may miss a potential business opportunity.
  3. For estate planning purposes. A business valuation is imperative when designing an estate plan, especially if you have children that will eventually inherit the business in the future.
  4.  Protecting your Family. In the event of death or disability, a business valuation will ensure that your family receives a fair price as a result of a buy sell agreement being triggered with co -owners.

Determining a valuation of a business can be complicated.  Some experts say it is more of an art than a science.  Business valuations should be conducted by a professional and may be costly; however, not having a business valuation may cost you even more.

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The companies of National Life Group® and their representatives do not offer tax or legal advice. For advice concerning your own situation, please consult with your appropriate professional advisor.