How Much is Your Business Worth?
It may seem like a simple question with a simple answer: “whatever a willing buyer would pay for the business.” However, in today’s complex business climate there are a number of critical factors that must be considered when determining an entity’s value.
Cummings Keegan, & Co. P.L.L.P (CK&Co.) valuation consultants can navigate the complexities to help you quantify the value of your business for tax purposes, financing, strategic management, and other reasons.
Our valuation services extend beyond providing a simple calculation and number. What is the story behind the business? The story of ownership, growth, future potential, and unique business characteristics contribute just as much to the resulting value. Prior to the valuation engagement, we will discuss your need for it and the scope desired.
Does My Business Need a Valuation?
There are many reasons a business may need a valuation. Consider some of the following common scenarios:
This is the most common reason for a business valuation. Owners request a valuation when they have a potential buyer or just want to know what the business is worth before looking for a buyer. A completed valuation will help identify key areas driving the value of your business and make it easier to justify your asking price.
Owners can realize great benefit in requesting a business valuation years in advance of the business sale. The valuation will identify key value drivers, allowing your leadership team to work on various items over time to maximize the value of the business.
This agreement allows for transactions in the company stock between existing shareholders. It also facilitates bringing in new owners and redeeming stock for exiting owners.
If the merger is through the exchange of stock, both companies must be valued to establish a fair exchange.
The corporation’s stock must be valued to set the initial offering price.
Typically, a business must be valued in divorce proceedings. The business is usually given to one spouse while the other receives assets of equal value as compensation. Other examples in which litigation matters require a valuation include insurance claims for lost business, shareholder disputes, and eminent domain proceedings.
A value needs to be placed on all assets to determine estate taxes. This includes valuing the business as well. Knowing what the business is worth makes estate and gift tax planning easier and more accurate.
How We Can Help
Our consultants seek to understand the nature of the valuation to provide the right service to fit your needs:
- What is driving the need for a valuation?
- Is the business for sale or is it part of an acquisition?
- Is current ownership looking to add more investors?
- Is current ownership trying to determine gifting and estate planning strategies?
- Is current ownership looking to change to an ESOP?
- Is the business part of a litigation process?
- Who is requesting the valuation?
- What approach will be used to value the business?
The in-depth analysis we undertake when performing a valuation creates an excellent starting point for developing a strategic plan. It provides the business owner with the opportunity to learn the drivers of the business and shows the owner how to integrate methods for maximizing that value into a corporate strategic plan.
The Accredited in Business Valuation (ABV) credential, established in 1996 by the AICPA, recognizes CPAs with extensive professional experience in business valuation. It is granted exclusively to CPAs who elect to demonstrate their business expertise and experience. Since inception, fewer than 100 CPAs in the State of Minnesota have earned this distinction. Kathy J. Klang, CPA/ABV CK&Co’s Managing Partner, is one of these exclusive professionals.
Benefits of working with a CPA/ABV
- Expertise in analyzing financial information and industry trends
- Independent, objective advice
- Value enhancement ideas to attract more buyers
- National expertise within your local community, with access to international expert