What Exactly is A Business Appraisal and Do You Need One?

appraisal

With 20% of the current market being overvalued, buyers looking to invest in a company may be reluctant because of an overinflated price. For small sites and startups, investor capital is essential. A business appraisal can make sure that if you’re a highly valued you know how much you can ask for and if not, that you can be a deal for a venture capitalist.

A business appraisal will calculate all of the current assets of your company and the wealth that you could build over the coming years. The appraisal will help with any tax or legal issue your business faces and can help guide the future of your company.

If you’re wondering whether or not your company needs a business appraisal, here are 4 reasons why you should always know the value of your company.

1. Owner Issues

If your company has had the same owner for a number of years, a sudden change would send your business into a spiral. If an owner gets sick, or god forbid, dies while acting as the executive, the business might need to change hands.

If there are any legal issues where an executive needs to step down, a current business valuation can assist the legal team in what to do next. If selling is the next step, you can optimize profitability if the value has been assessed correctly.

2. Selling or Merging

If you get an offer from another company to buy yours to eliminate competition or merge your resources, you might be confined to a short time frame. If you don’t know the value of your company, how can you know if the offer they’ve given you is fair?

A recent valuation will allow you to negotiate a deal quickly before your offer comes off the table.

3. New Partners

If you’re growing and want to add a new partner or an LLC member to your company, you need to know their buy-in price. Knowing how much your business is valued at will allow you to make sure that everyone is making the same investment in your company.

Make sure you update your website when you add any new staff or make changes to your company structure. That’s the first place any trade magazines will look for news about your company.

4. Exit Strategies

Older companies or older executives might one day think about retiring, although one-third of executives think about dying on the job. Having an exit strategy on the books can help transition any retiring workers out of their role while not slowing momentum for your company.

An up to date valuation will help you to determine a strategy that works for your structure.

A Business Appraisal Can Add Safety And Security

No matter the age of your business, an appraisal can bring all sorts of benefits. You can figure out where you stand in relation to the rest of the market and how your spending is matching returns. It will also help you to secure your place if you’ve hit the top of your field.

If you’re ready to run your company through the appraisal process, contact us to set up an assessment today.

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