Business Valuation Services
16 REASONS FOR BUSINESS VALUATION
Business valuation is a process, a set of procedures and a predetermined formula used to estimate the economic value of an owner’s interest in a business.
In a public company, valuation is used by financial market participants to determine the price they are willing to pay or receive to affect a sale of a business. This is controlled by many visible and invisible market forces.
The private companies, sole traders, partnership do carry out business valuation to know the value of their business and interest in the business from time to time.
- To set a basis of value for a business when no valuation is place.
- To know and document the value (worth) of the business.
- To evaluate an offer and negotiate a strategic sale of a business to new investors.
- For exit strategy planning purposes. When a business owner or other stake holders want to leave exit a business, it would require knowing the present value of the business.
- To justify the per share equity value in a company for annual shareholder meetings.
- For performance evaluation from period to period.
- For shareholder or partnership disputes.
- For shareholder or partnership investments or buyouts.
- For buy-sell purposes and funding the agreement.
- For financial reporting purposes – to allocate the purchase price to appropriate equity classes and determine if there is any goodwill impairment.
- To determine the purchase price when it comes to acquisition of a business.
- For estate tax reporting purposes of a decedent, determine the estate value for tax and other form of capital gain tax in the hand of seller or old investor.
- To value a business for winding up or bankruptcy
- For litigation support purposes, to determine economic damages, lost profits, uncover fraud or value of a business in a shareholder or partnership dispute as may be required by court of law.
- To determine the intrinsic value of a business and see whether it is different from the fair market value of the business as determined by market mechanism
- To identify whether the business is growing, stagnant or declining in value to restructure the business and other strategic approaches.
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