Every business owner should have a good idea of what their business is currently worth even if they don’t intend on selling the business soon or at all. But you may also need to know what a business is worth in the following non-exhaustive list of circumstances. How many reasons do you have to find out what a business is worth?
- Buying a business or division externally or internally
- Selling a business or division externally or internally
- Shareholder/partner agreements and buy/sells
- Estate and superannuation planning
- Family law – separation and prenuptial
- Business insurance policy structuring
- Personal insurance policy structuring
- Actual death or disability of the owner/(s)
- Litigation as plaintiff or defendant
The problem is that business valuations are a complex mixture of science and art that are further confused by ‘listing prices’ displayed by business brokers and their often flawed ‘rule of thumb’ methods that make no commercial sense. The steps to value a business are fairly straightforward but need to be followed diligently. » Read more: How to Value a Business