The 7 Have-To Valuations

There are times your business is going to need a valuation. During situations like these, when you don’t know the fair market value of your business and its assets, your lack of knowledge can hurt your business and cause losses of thousands of dollars. Below are several of the most common situations that cause the “Have-To” valuations—times where knowing your worth is the only option.


1. The Death of a Shareholder

When a shareholder passes away without making clear the allocation of his part of the company, before you can decide what to do with it – divvy it up, fold it back in, or allocate it to a new owner – it’s important to know how much it is and its worth, especially against the rest of the pie.


2. Equity Compensation Plans

An equity compensation plan is a program designed to provide tangible income to employees, directors, or even contractors tied to the value of ownership in the company. Before you can look at stock options, you need to know the value of them – otherwise what are they worth?


3. Employee Stock Ownership Plans

Much like equity compensation plans, employee stock ownership plans (ESOPs) allow employees to “buy in” and become vested into the company. When an employee leaves, he sells the stock back into the company at fair market value, so it’s important to know that number.


4. Dispute Related Valuations

When related valuations crop up, such as from a shareholder’s divorce, dispute with another shareholder, or one they’ve made in preparation for selling their ownership, it’s important to get a second opinion. If it comes to legal blows, having your own valuation to counter with is vital.


5. Charitable Contributions

Writing a check is one thing, but if you’re donating tangible (or intangible) assets to a charity, you have to know their value for the associated tax break. You need to know the fair market value of these contributions to back up what numbers you put down on your taxes.


6. Allocation of Intangible Assets

Did you gain intangibles from a merger, or are you removing some from your company? When allocating them into or out of your company’s structure, you need to know how much they are worth, for the purpose of your company as a whole, and the increase or decrease in owner/shareholder value.


7. Selling Your Business

The single most important reason to get a valuation for your company is when you’re looking to sell it. To establish how much your company is worth – its fair market value – you need to perform a valuation: a painstaking inventory of all your assets, goodwill, debts, profits, and more, and their worth to someone looking to acquire your company in terms of growth, cash flow, profits and so forth.


When you’re looking to get your company’s worth appraised, you need to find the best business experts in the area with the reputation to back up their findings. In New England that’s George & Company. Not only do we have the experience: we’ve been serving the New England area for over 30 years. Experts in helping buyers and sellers find their opposites, we can also help you locate a buyer for your company, or help you grow your own through mergers and acquisitions. Reach out to us for a free basic business valuation.