What is my Business Worth?

Leave a comment   Published in: ,    on March 10, 2014   by Justin Ward

The importance of business valuations

As a business owner, do you know what your business is worth right now? In our experience, some owners struggle to accurately value their operations. Or they base their valuations on outdated assumptions and gut feel.

ValueEither way, without a robust and accurate valuation, owners (and their advisors) may be at a disadvantage during potential transactions. They may also encounter additional difficulties in challenging scenarios such as family and relationship disputes, and business restructures.

Here are four reasons why you might need a business valuation.

Drive successful business transactions

In any transaction, buyers typically want to minimise their purchase price, while sellers to maximise their sale price. This tension can be the source of conflict.

Business valuations can act as a circuit-breaker during transactions. For instance, a good quality, independent valuation provides an objective assessment of a business’s value and sets a starting point for negotiations. In this way, a robust business valuation can help parties settle on a fair market value.

Manage family and relationship conflicts

During family disputes, such as family law disputes and divorces, you might need to obtain a business valuation as part of proceedings. This can help you ensure that assets are distributed fairly and equitably.

Undertake effective business restructures

When a business hits a bumpy patch, stakeholders (such as company directors, shareholders and advisors) should move quickly to get a company back to a secure footing. But what’s the best strategy to pursue?

One possible option may be to restructure the business. This could include streamlining operations and adopting a new company structure. During this process, it is important to understand how each strategy may affect the value of the business. So, stakeholders can use business valuations to assess the impact of different courses of action.

Plan for a comfortable retirement

For business owners, their company is usually one of their most valuable assets. In preparing for retirement, owners should consider how much their ideal retirement is likely to cost, and whether their business will be sold to fund this lifestyle.

Well before retirement, owners should obtain a comprehensive business valuation to ensure their prized assets are sufficient to fund an ideal retirement. Otherwise, business owners may enter retirement without enough money to pursue long-held plans, such as overseas travel.

As you can see, business valuations underpin important business and personal decisions. And, in practice, valuations can be quite complex to complete. For an obligation free, fixed fee quote please Click Here.

At Macleay Partners, we undertake comprehensive and accurate business valuations that are easy to understand, and comply with legal and regulatory obligations. To find out how we can help, please contact Macleay Partners Director Justin Ward at justinward@macleaypartners.com or on 0420 305 345.

P.S. If you liked this post, you might also like Taking it personally: how company directors can intervene early to avoid personal liability or Getting ahead in the cloud: a quick guide to cloud computing.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>