You want to know the value of your business. R&A can help you with that.
Many business owners are faced at some point with the question “What is my company worth?” This question can arise for many reasons including a potential sale of the company, the buyout of a retiring shareholder, shareholder litigation, a divorce, management planning for operational purposes or to grow the value of the company for a future sale on retirement, gifting shares of stock, estate tax reasons, and others. The question can be deceptively simple because some industries have rules of thumb developed by business brokers that provide ballpark estimates, but the truth is that the value of a business can vary greatly from these general rules of thumb. There are a multitude of factors that can affect the value of a company including stability in earnings and cash flow, growth prospects, amount of business risk, financial risk, and whether there is a trained workforce, among others. The benefits of a comprehensive business valuation can be significant:
- Optimal use of time and money– Eliminate the need to negotiate extensively with business partners on the proper value of their interest in the company or with buyers upon sale. A thoughtfully considered business valuation can establish an agreed value for these transactions and eliminate many hours of time and resources spent in negotiations.
- Avoidance of IRS penalties – The IRS can levy heavy penalties on taxpayers and professionals who submit tax filings where the IRS determines that a substantial undervaluation has been reported. Often this happens where values are determined without a comprehensive business valuation or one that does not meet IRS criteria. The cost of penalties resulting from an audit can outweigh the cost of a properly supported business valuation.
- Avoidance of prolonged litigation – One of the key areas that often prolongs litigation is the lack of a proper business valuation. If a business valuation is not prepared in accordance with the requirements of the court where it is to be submitted, often it leads parties to obtain a second valuation or, in some cases, to settle on a value that may not be fair in the circumstances.
- Information for business planning– A business valuation will provide clarity about the strengths and weaknesses of the business. These insights can assist management in planning to reduce areas of risk, work to stabilize earnings and cash flows, and maximize future value in the event of retirement or sale.
We work the details so you can see the benefits – An independent and rigorous analysis is a wise investment. R&A works through the details by conducting management interviews, gaining a thorough understanding of your business, and using current research and proven methodologies to determine a well-reasoned value for your business.
If you are in a situation that requires an answer to the question “What is my company worth?” avoid the pitfalls by obtaining a comprehensive business valuation. If you are interested learning more about the benefits in your situation, please give us a call.