Small Business Valuation Methods That Don’t Account for Actual Buyer-Seller Behavior Are No Help To Owners Looking To Attain Real Outcomes.
You are ready to get serious about your post business future. Maybe the outcome you want will require selling the business. Or maybe it has you thinking about a succession and turning it over to your people or family. You know that financial independence is one outcome that has to happen for you. You feel that the best way to start is to get a business valuation. After all, you need to know what it is worth before you can do any other type of planning.
So you call a business valuation specialist and you spend a lot of money on a very long, detailed document that gives you a number. You are now armed with the tool you need to pursue your outcomes. Except you are not as prepared as you think you are.
The Reality of Small Business Valuation Methods
This is because the standard business valuation is prepared for the purpose of establishing taxable value for events involving the Internal Revenue Service, not for the purposes of establishing Realizable Value in a real life sale or succession situation.
How can this be? Aren’t they the same?
Not at all. Here is a very simple example.
Assume we have a business that is extremely dependent on the knowledge of its owner for its success. If the owner dies, the estate will find that the IRS will assign a value to the deceased owner’s interest. But when the heirs go to sell the business, they will find that without the deceased owner’s contribution, the business has very little realizable value at all!
Our Small Business Valuation Methods can help you identify the issues that can decrease the realizable value and those that can increase your value. It additionally will provide you a template and action plan for making the changes necessary to achieve the increase in your realizable value.
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