The common assumption of a valuation is that one is only needed during the process of selling a business. However, there are a variety of other reasons to have a valuation performed, including shareholder disputes, marital dissolution or estate and gift purposes.
Selling of business: As an owner contemplates selling their business, a valuation can assist in setting a base line value. The owner can then employ different strategies to increase the value prior to putting it up for sale.
Shareholder Disputes: If an owner decides they want out of the company, a valuation is necessary to ensure an independent and unbiased value of the shares.
Marital Dissolution: If a business is included in a marital estate, the fair market value needs to be determined as part of the equitable division of marital assets.
Estate and Gift: Knowing the value of business interests helps an owner do proper estate planning and upon death, a valuation may be required to value the business for the estate tax return. Similarly, if a business owner gifts interest in the business, a valuation is needed to avoid problems with the IRS.
The reasons for a valuation listed above are not all encompassing. If you find yourself in need of the above service or simply want to consult on other instances in which you believe a valuation may be necessary, please reach out to Brandon Reinschmidt or Samantha Lass for more information.