When to Conduct a Business Valuation
Understanding the Right Time to Know Your Business’s True Value
A business valuation may be used for buying or selling a company, mergers and acquisitions, shareholder matters, legal proceedings, estate planning, or to stay current with the growth of your business. Regardless of the reason, everyone should know the value of their business.
When and Why a Business Valuation Is Needed
A valuation may be used to buy a company, sell a company, mergers and acquisitions of two existing companies, to sell shares of the company to key employees, for divorce estate settlements, to settle estate and tax issues, for insurance issues or to stay current, organized and congruent with the rapid growth of your business.
Regardless of the reason, everyone should know the value of their business.
Two businesses both netting $250,000 can have considerably different market values due to such comparative considerations as revenue growth rate, equipment condition, customer concentration, intellectual property, barriers to entry, competitive situation, owner’s role, administration systems, labor and capital intensity, etc.
One business may be operating below capacity and the other might require significant capital investment in order to grow. One may have an absentee owner with strong operating management while the other could be highly owner dependent.
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Success Stories
How Business Valuations Determine True Value
There can be myriad business valuation variances for companies that on the surface are quite alike. Attempting to value a business based strictly on market comparables results in an average business valuation that is insensitive to distinguishing characteristics and hidden aspects of the business.
The business valuation of intangible assets relies on income-based methods. Accurate discernment of earnings and seller’s discretionary cash flow (SDCF) is essential if the value is to be true.
The business valuation process begins with a detailed examination of the company’s revenue and expenses to accurately determine true earnings performance.
Examples of discovery challenges include:
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Compensation that may not be necessary
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Personal assets run through the business
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Rent that may not be at market rate
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Inventory pricing creativity
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Owner-dependent revenue
Such challenges illustrate the rationale for a formal business valuation if a business is to be fully valued.
Find Out What Your Business Is Worth
Whether you are preparing for a sale, planning for the future, or navigating a complex transaction, understanding your business’s value is essential.
Legal and Compliance Considerations
Courts and legal proceedings require qualified and credible valuation experts. Choosing the right expert can make all the difference.
Key Factors When Selecting an Expert:
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Court qualification and credibility
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Confidence in the opinion of value
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Empirical support for valuations
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Ability to defend opinions in direct and cross examination
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Advocacy for their professional opinion, not a client’s position
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Track record of mutual stipulations between parties
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Staying current with state law and professional standards
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Coaching clients on key issues prior to hearings or trials
Our team at George & Company is qualified, experienced, and well-versed in New England legal standards, ensuring your valuation is defensible and reliable.
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Specialized Valuations – Divorce & Buy/Sell Agreements
Divorce Appraisals
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Massachusetts valuation rules have evolved, including the landmark Bernier v. Bernier case.
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George & Company has conducted hundreds of divorce appraisals, maintaining strict professional ethics and impartiality.
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Often, our experts are stipulated as mutually accepted for efficiency.
Experience & Qualifications:
- Life member of The Institute of Business Appraisers
- Testified in numerous family court cases
- Thousands of empirical “sold business” statistics
- Practicing divorce valuations since 1986
- Excellent presentation skills on the witness stand
Buy/Sell Agreements
- Valuations may involve cross-purchase agreements, insurance funding, or Keyman Insurance to protect the business.
- We ensure proper coverage and accurate valuation of partner interests.
- We also assist buyers with evaluation, Offers to Purchase, and Buy/Sell Agreements while representing their interests.