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By Zinner & Co. 

As many private business owners are aware, the value of their business is more than a number. How many recognize the importance of a business valuation? Knowing and understanding what the value of a business is, and what impacts its value makes all the difference from not only a tax perspective, but also when it comes time to sell, merge or divestUnderstand the Importance of a Business Valuation

All business owners have some level of planning to do, whether that  is selling to a third party, creating a succession plan for a family member, or preparing for the untimely departure or death of a partner. Valuations for the above three factors will depend on different factors to determine the true fair market value of the business.  And, these are just a few of the situations that could affect the value of a business over time.

The importance of communicating to and choosing the right valuation team cannot be more important.  Here are few things to consider when selecting the right business valuation team.

  • The valuation team should have a true understanding of the business, its operations, leadership, and over reason for the valuation.  For example, if the business owner’s need for a valuation is to begin gifting stock or units of ownership to his or her children, the valuation team may focus on discounts for lack of marketability and voting rights since the owner would want a lower value. 
  • If getting a valuation is for a potential sale, the business owner would want to meet with the valuation team in advance to learn about key factors that may drive the value higher and implement those factors prior to the valuation.
  • The goodwill of the owner based on his or her relationships in the market may help to drive up the value, but only if the valuation team is aware of such relationships. It is important for owners to have candid, comprehensive and comfortable channel of communication with their advisor.

Related read: Is It Worth Getting a Valuation for Your Small Business?

Zinner & Co.’s long list of services for private business owners includes a strong valuation practice.  We’re ready to be the right valuation team for your company; our expertise in planning, together with a sound strategic approach will help you work seamlessly through all phases of your business. It is never too soon to begin working with a valuation team and plan for a successful future. 

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