Life moves and changes at a rapid pace. How prepared is your company for the future, and how prepared is your business exit strategy?
A valuation of your company is the best thing to provide you insight into the drivers
of value of your company. The valuation is also commonly used for:
- Succession Planning (transferring the company from one generation to another).
- Mergers & Acquisitions (selling or buying another company).
- Death (knowing the value of the company when an owner has suddenly passed away).
- Divorce (dividing assets appropriately).
Key Considerations for a Bright Future and Business Exit Strategy
Almost all companies will need a business valuation for one of these common reasons at some time in the future since it allows you to position your company based on its value drivers. Knowing those value drivers early provides you with information and time to start positioning your company to increase that value.
The governing documents of the company should include a buy-sell agreement. What that buy-sell agreement determines is how any of the common situations above should be handled – before you are in the midst of the event. The events above will be handled according to the previously agreed-upon terms, which helps reduce the gray areas that are typically problematic. Questions typically associated with these changes range from the price that a new owner will pay for ownership in the company to the amount that a surviving spouse will be paid for his or her interest and the corresponding value for estate tax purposes.
Many business owners ignore these provisions because in their minds they are never going to happen. However, these buy-sell provisions become very important and costly if not set-up before the time comes.
Do you know how much your company is worth? Do you know the drivers of value? Are you prepared for your exit? Or, do you need a business valuation for your company? If you answered “yes,” to any of these questions, then give CRI’s business valuation professionals a call for assistance.