Important Reasons to Get Business Valuation Done

Posted by Zelinia Dsouz on June 30th, 2016

The changing economic climate isn't a secret anymore; and we doubt it ever was. This change is primarily affecting the area of finance, which makes it imperative for business owners to keep a close watch on their businesses' values. Owing to ever-changing market, the business values are fluctuating and you would probably see that dip or rise in value when you compare your current business value with the one of last year. There may not be a significant change, but you can still expect a change nevertheless. Mentioned are three reasons, which should encourage you to get your business valued from a professional business valuation firm, at least once every year.

Are you a startup? Businesses in startup phase need to know their value in order for them to know the part of their business they need investors to take over in return of seed money. The percentage of the company the investor will have owing rights of is calculated by pitting against each other your business' total value and the amount paid by the investor. One important thing considering the valuation of startups is the factors taken in to account – as it's still early days, valuation is not done on the current financial value, but on its potential of growth.  

Do you have a buy-sell agreement with a partner or are either of you considering buying the other one out?  If so, it is imperative to update the Valuation of the company each year.  The Value can change significantly based on business conditions.  If the last Valuation of your company was five years ago and the company was very small then that Valuation would be very inaccurate.  If that Valuation was used to have your partner buy you out then you would be significantly under paid for your portion of the company.

Are you selling your business? If you are on the verge of selling your business, you will need a business valuation company to appraise its fair market value. The valuation will also help identify weaknesses that you can work on to increase the value of your company.  

Getting your business valued has many roadblocks, one of which is lack of time. Most owners are so busy running their business that they don't find time to do a thing, which is very important. However, they should understand that valuing their business will help them in improving if you want to continue or getting the best price if you want to sell.

About The Author

The author is a blogger. This article is about business valuation. For more information visit : www.sunbusinessvaluations.com