Professional business valuation services are provided by firms that have many years of experience placing a market value on a business. There are many reasons it makes sense to use this type of service. The following are only a few of the most common ones.
When you are looking to sell your business
You may not think it is unnecessary to have a value placed on your business. After all, you negotiate for the best price. It couldn't be simpler than that. But if you have put a lot of time into your business, you may overestimate its value, and end up asking too much for it. On the other hand, if you underestimate the value of your business, you can leave a lot of money on the table. Over time, your business may grow in value beyond what you realize, for reasons you may not be aware of. In both situations, you are simply too close to your business to evaluate its worth objectively. A professional business valuation firm can offer an unbiased point of view.
You are nearing retirement
If you are planning for your retirement and it is only a few years away, knowing the value of your business today can help you plan for your income in retirement. You may be able to retire earlier than you had planned, or perhaps you may want to delay retirement for a few years. Regardless of your retirement status, if you are engaged in estate planning, a good valuation of your business can help your estate planning attorney work with you on how best to distribute the equity of your company. You may even want to place your business into a living trust.
You are considering a business loan
If you are considering using the equity in your business as collateral for a business loan, this service can help you determine if it is worth the trouble. The first thing you can discover is how much equity your business has. It is possible that there simply isn't enough to make it worth your while to use it as collateral, but it is also possible that you have enough equity that you need only use a portion of it to secure the loan. Whatever the case may be, having a good number for the valuation of your company can help you determine if using your company's equity is a good idea.
The situations listed above are only three of the reasons to use a business valuation service, like Appelrouth Farah & Co. Any situation where you need a good number for the value of your company should be done objectively by a professional.