How do I determine the value of my business?
You can ascertain a baseline for tax planning and transfer agreements by getting an informal or formal Business Valuation conducted. Understanding the exact worth of your assets gives you realistic expectations for selling or passing down the company.
What is the difference between a formal and informal business valuation?
A formal business valuation (or "Conclusion of Value") is a comprehensive, certified appraisal conducted by an independent expert for legal, tax, or sale purposes. An informal valuation (or "Calculation of Value") is a quicker, less expensive estimate used for internal planning, goal-setting, or preliminary negotiations.
Which type of valuation do I need? Formal or Informal?
If you are in the building stage and not looking to sell immediately, an informal valuation is more cost effective and used for planning purposes. If you are selling to an employee or family member, and informal valuation allows you to get a price to negotiate the deal. If you are selling to a third party or listing the business, you would want a formal valuation to verify the business value to an unknown party. If the IRS or your accountant is in need of a value of your business, you would need a formal valuation.
Does your company offer both formal and informal valuations?
Yes. The base price and the consultation program both include the informal valuation. To secure a formal valuation, we charge an additional $300 to get an additional external valuation that satisfies the requirements for formal valuation standards.
What can I do with a business valuation?
Business valuations are used for many purposes. Base reason is to understand what your business would be worth in a sale scenario. Valuations are used by banks for loans and financing options. Valuations are also used to set up a future purchase agreement (buy-sell agreement) with a family member or key employee. They are also integral to owners wanting to sell at some point as it allows the owner to see what they can get now, and what they could sell for in the future with adjustments to the business’ operating processes.
What is a buy-sell agreement?
A buy-sell agreement is a legally binding contract between business co-owners or the business itself. It determines exactly how an owner's share of the company will be reassigned, who can buy it, and at what price if they die, become disabled, or leave the company.
When should I start planning?
Ideally, as soon as possible. Developing strong, capable leaders and ironing out the legal details takes years. It is highly recommended to start transitioning ownership and responsibilities well in advance of your desired exit date.
What happens if I pass away without a succession plan?
Without a clear plan, your ownership interest becomes subject to the laws of intestacy or the provisions of your personal will. This can lead to fractional ownership being distributed to unintended heirs, co-owner disputes, or the business being forced to close due to a lack of legal authorization to manage day-to-day operations.
What are my options for transferring the business?
You have four primary paths depending on your goals:
How does a valuation and equity growth program help me as the owner?
A valuation allows the ownership the ability to see where the business is currently and, most importantly through the growth program, the owner identifies key spots of the business that can be addressed to increase the sale price. These changes also allow a business to run more efficiently and reduce the hours spent by the owners on running the business – a new owner doesn’t want to pay to work 80 hours a week!
What are the tax implications?
Transferring ownership can trigger significant capital gains or gift taxes. As a number of factors affect cost basis and taxability of the business sale, engaging a professional for Tax Planning Services ensures your business structure limits your tax liability and adequately funds the transition.
You can ascertain a baseline for tax planning and transfer agreements by getting an informal or formal Business Valuation conducted. Understanding the exact worth of your assets gives you realistic expectations for selling or passing down the company.
What is the difference between a formal and informal business valuation?
A formal business valuation (or "Conclusion of Value") is a comprehensive, certified appraisal conducted by an independent expert for legal, tax, or sale purposes. An informal valuation (or "Calculation of Value") is a quicker, less expensive estimate used for internal planning, goal-setting, or preliminary negotiations.
Which type of valuation do I need? Formal or Informal?
If you are in the building stage and not looking to sell immediately, an informal valuation is more cost effective and used for planning purposes. If you are selling to an employee or family member, and informal valuation allows you to get a price to negotiate the deal. If you are selling to a third party or listing the business, you would want a formal valuation to verify the business value to an unknown party. If the IRS or your accountant is in need of a value of your business, you would need a formal valuation.
Does your company offer both formal and informal valuations?
Yes. The base price and the consultation program both include the informal valuation. To secure a formal valuation, we charge an additional $300 to get an additional external valuation that satisfies the requirements for formal valuation standards.
What can I do with a business valuation?
Business valuations are used for many purposes. Base reason is to understand what your business would be worth in a sale scenario. Valuations are used by banks for loans and financing options. Valuations are also used to set up a future purchase agreement (buy-sell agreement) with a family member or key employee. They are also integral to owners wanting to sell at some point as it allows the owner to see what they can get now, and what they could sell for in the future with adjustments to the business’ operating processes.
What is a buy-sell agreement?
A buy-sell agreement is a legally binding contract between business co-owners or the business itself. It determines exactly how an owner's share of the company will be reassigned, who can buy it, and at what price if they die, become disabled, or leave the company.
When should I start planning?
Ideally, as soon as possible. Developing strong, capable leaders and ironing out the legal details takes years. It is highly recommended to start transitioning ownership and responsibilities well in advance of your desired exit date.
What happens if I pass away without a succession plan?
Without a clear plan, your ownership interest becomes subject to the laws of intestacy or the provisions of your personal will. This can lead to fractional ownership being distributed to unintended heirs, co-owner disputes, or the business being forced to close due to a lack of legal authorization to manage day-to-day operations.
What are my options for transferring the business?
You have four primary paths depending on your goals:
- Family transfer: Passing the reins down to a family member.
- Sale to an insider: Selling the business to a key employee, co-owner, or partner (sometimes utilizing an ESOP).
- Sale to a third party: Selling your interest to an outside buyer or competitor.
- Liquidation: Extracting your assets and closing the business permanently.
How does a valuation and equity growth program help me as the owner?
A valuation allows the ownership the ability to see where the business is currently and, most importantly through the growth program, the owner identifies key spots of the business that can be addressed to increase the sale price. These changes also allow a business to run more efficiently and reduce the hours spent by the owners on running the business – a new owner doesn’t want to pay to work 80 hours a week!
What are the tax implications?
Transferring ownership can trigger significant capital gains or gift taxes. As a number of factors affect cost basis and taxability of the business sale, engaging a professional for Tax Planning Services ensures your business structure limits your tax liability and adequately funds the transition.
