A business valuation is required in many instances. Several of the most common include:
- Acquisitions or sales.
- Bankruptcy proceedings.
- Buy/sell agreements.
- Divorce.
- Estate or gift planning and compliance.
- Impairment testing.
- Raising new capital.
- Shareholder disputes.
- Stock-based compensation.
Under the above scenarios, a full business valuation is generally necessary to satisfy legal or regulatory requirements. This exercise mandates the preparation of a comprehensive written report along with supporting schedules.
When dealing with acquisitions, though, the process can be nuanced: Have rough parameters around the purchase or sale been agreed upon, or is a transaction a mere possibility, more hypothetical than not?
Perhaps you, as a business owner, have received a flattering, albeit unsolicited, offer to sell. It’s a first for you, meaning you’ve never attempted to assign a dollar value to what you have spent years building and running. So, you think, if not say:
“What am I worth?” or “I need to get a feel for what I’m worth.”
In this instance, a full business valuation (with a comprehensive report) would fill the bill. However, it might be too costly and provide more information than needed for this purpose.
What might be of most benefit, then, is a valuation with a set of schedules containing explanatory footnotes and a brief discussion of methodology — something that can be clicked or flipped through that provides (i) a sense of the value of your business needed to be able to respond appropriately to your would-be suitor (engage further or deflect) at (ii) a reasonable cost without (iii) providing an extraneous narrative that contains pages of information that you already know about your business, industry and the overall economy.
So, if you’re thinking about acquiring or selling a business, contact your CFGI valuation professional to discuss how we can work with you to achieve your desired outcome.
