Every smart business person knows the importance of being able to present a fair and accurate accounting of a businesses’ value. It is particularly important when attempting to sell a business. This valuation document is the single most useful piece of financial information about any business.
A valuation has many purposes and can be used to:
- Prove the Fair Market Value of your business.
- Provide Information to lending institutions for a business loan.
- Validate information for a Merger, Acquisition or Stock Offering.
- Create a succession plan or a trust.
- Develop an estate plan or tax plan to protect wealth.
- To determine the value of assets and liabilities.
- For the creation of an Employee Stock Ownership Plan (ESOP).
To know why it's so important to have a valuation you must understand that the book value reflected on the financial statements of a business usually differs vastly from its true market value.
Without a new valuation, a business owner must be prepared to defend his opinion of value. For instance, any potential buyer will place little credibility in a value arrived at by an owner’s accountant. Therefore, a properly prepared valuation report by a valuation expert would become the best tool usable to obtain maximum selling price.
When you work with a VR Intermediary to create a valuation report, the goal is a simple one: the creation of an accurate and comprehensive document that will stand up to scrutiny.