More Bang for Your Buck: 4 Reasons Why Valuating Your Business is Necessary

If you own a business, you likely have a good understanding of how much money it is bringing in, what types of expenses it has, and many other pieces of information related to its financial health. One of the most important, yet most often overlooked, factors about your business is going to be how much it is actually worth. Valuating your business is absolutely essential for many things throughout the lifecycle of your company, and is almost mandatory if you are thinking about selling in the future. The following are just a few of the most important reasons why having a current valuation of your business is always a good idea.

Streamline Negotiations When Selling the Business

If you want to sell your business, having an accurate valuation will allow you to start the negotiating process with hard facts rather than opinion or emotion. There will still be many details that need to be worked out, but the valuation will help to weed out unreasonable offers that waste everyone’s time.

Working with Departing Shareholders

If you have a business that is either a partnership or has multiple shareholders, it is almost inevitable that eventually at least one of the parties will want to exit the business. Without a good valuation, it is very difficult to come up with a fair and equitable buyout price for the individual.

Taking on Investors

When growing your business, it is often necessary to raise some additional capital. This is typically done by taking on investors, who may want equity into the company. When this is the case, you will need to know the current value of the business so you can come up with a fair ownership percentage to offer based on the amount of capital that is being brought in.

Determining Obligations for Taxes & Litigation

Taking care of financial obligations such as taxes and litigation (including divorce) can be very difficult. If you don’t have an accurate valuation in place, it is nearly impossible to come up with the right amounts for these things. Depending on the situation, this can end up making it so you are required to pay much more than would otherwise be necessary.

Get the Valuation You Need

If you would like to learn more about the importance of valuating your business, or you need help with the valuation process, please contact APH LawWe will work closely with you to come up with an accurate valuation of your business so you can use this information in the above situations, or any others.

Written by APH Law PLLC

APH Law PLLC

When we founded APH Law PLLC in 2010, we did so out of a desire to connect business owners with more and better opportunities. No matter what industry you’re operating in, creating a strong foundation, preparing for the future, and protecting against challenges are key to long-term success. It is this kind of support that we take tremendous pride in helping businesses.