Open Mobile Navigation
330.492.0094

Why it's vital to know the value of your business

5/15/2015

Would you be surprised to learn that most business owners don’t know the value of their own businesses?

growth chart

More than half of business owners have never had their company valued and don’t anticipate doing so, research shows, and many believe they don’t need a valuation unless they are planning to sell their company.

This belief can be short-sighted.

The reasons a business owner would choose not to have a valuation done run the gamut – from the assumed costs involved, to not believing it is necessary, to simply not understanding the impact of not doing so.

An accurate business valuation can be a valuable tool in many instances, and overlooking this critical part of your asset portfolio can lead to unintended consequences, both fiscally and personally. Many have faced burdensome taxes and personal animosities over perceived entitlement to a value of a business.

In addition to giving business owners important information about the quality, viability and possibilities about their businesses, business valuations are used for a variety of specific situations:

For larger companies, a business valuation would be needed if the company has an employee stock ownership plan (ESOP) or if the company wants to go public in what is known as an initial public offering.

Benjamin Franklin once wrote, “In this world nothing can be said to be certain, except death and taxes.” He wrote this in 1789, and it stands true today.

While death cannot be avoided, proper planning and use of a business valuation can often help alleviate tax burdens while also providing business owners with pertinent information that will assist them in a variety of situations. – Lynne Broza, CPA/ABV, CFF

© 2019 All rights reserved.