Importance of a Third-Party Valuation for Your Business

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While there are some who may think you only need to know the value of a business if you’re looking to buy or sell it, this couldn’t be further from the truth. There are actually numerous situations where knowing the value of your business is important even if you have no plans to sell, plus somewhere a sale will indeed be the main reason for obtaining such a valuation.

At My Biz Value, we’re happy to offer the very best business valuation services in the industry, whether you’re looking to buy a business, sell a business or even hit at other areas like personal financial planning. Here are some of the main reasons why it pays to have a third-party valuation of your business in many different settings.

Knowing Your Assets

Throughout the regular course of business, there are numerous different scenarios where having an updated idea of your business’ value can be extremely useful. This might include times where you want to obtain a loan, or when it’s time to determine your tax situation for the year.

For instance, what if you’re looking to secure financing and are offered a loan at, say, 75 percent of the business’ value? You may find this isn’t enough to cover your needs. Or if you’re planning on selling your business and want to know what price you might reasonably expect to be able to bring in for it.

Setting Benchmarks for Future Performance

Another great reason for valuing your business is that it gives you the ability to track its performance over a period of time. When used in conjunction with other metrics, such as revenues and profits, a valuation can give you an idea of how well your business is doing from one year to the next – plus any improvements or changes you will need to make throughout the future.

You can use this information to make strategic decisions that will help your business flourish, whether it’s in identifying new target markets to enter or simply realigning your strategy in order to get closer to a desired end goal. For example, you might find that your business is underperforming in a certain area, or even that you’re using too many resources for the amount of income you’re bringing in.

Highlighting Weaknesses to Correct

Business valuation services from a quality third part like our team at My Biz Value are much, much more than just a single number telling you the overall value of your company. Rather, they contain numerous specific details about the assets you own and how they’re performing. This can help you to identify any weaknesses in your current business strategy so that you can correct them in a timely fashion.

For instance, perhaps one of your suppliers is overcharging you or offering inferior products compared to others on the market. You might also discover that there are certain services or products that aren’t performing as expected – and by taking steps to correct this, you can dramatically improve your business’ value for future sale.

Managing Tax Transactions

Taxes are always a huge part of any business, whether as an individual owner or as a larger corporation. Knowing the value of your company can help you to make informed decisions about when and how much you should pay in personal income tax.

There’s also the matter of determining capital gains taxes if you ever do plan on selling your business – both for yourself and for any employees or partners you have. If you’re planning on selling your business, a third-party valuation can help to ensure that you get the best price possible for it.

Showing Company Growth

Many companies choose to have a valuation done annually or even more frequently in order to get a sense of how their company is performing. This can help you identify any areas where your business may be underperforming and take steps to correct it, all while benchmarking it against years past. The information contained in a valuation can also be helpful in the planning stages of new projects or ventures, giving you the comfort of knowing that you’re making the right choice with your money and time.

Let’s say you’re looking to expand and open a new location for your business. You might need to start thinking about what type of financing you’re going to use, such as taking out a loan or using your own personal funds. In either case, valuing your company can give you a clear idea of what price you’ll need to achieve in order to make that decision.

Preparing for Unsolicited Offers

Even if you’re not actively looking to sell your business, you might still receive an unsolicited offer from someone who has their eye on it.

By having a valuation completed, you can be sure you’re getting the best price possible for your company. This is also a great way to avoid losing out on potential sales if you have some doubts about whether or not the offer is worth your time.

Of course, it’s important to note that valuations are not always 100% accurate – and they can sometimes fluctuate depending on market conditions or other outside factors. However, having a valuation completed is still an excellent way to get a clear idea of how much your company is worth at any given time. You can then use this information to make the best decisions possible for your company’s future.

For more on why a third-part business valuation is so important, or to learn about any of our valuation services or programs, speak to our team at My Biz Value today.

Rick

Business Valuation Expert at My Biz Value having valued hundreds of businesses and dental practices nationwide, Rick is an expert in valuing all types of businesses. He has access to multiple national databases of comparable business sales which are used in the Valuation Reports. His business sales experience lends itself well to correctly valuing businesses. See: www.MyBizValue.com Mergers and Acquisitions (M&A) Professional. Head of the M&A division of Business Sales Group. Advisory services are offered to clients in the Rocky Mountain and Midwest regions of the US. BSG occupies the Mid-market space specializing in selling and buying high-growth potential businesses with ample runway having Sales of $1 million-$50 million. Rick is a "deal guy"​ who specializes in maneuvering through the "sticky"​ parts of a transaction to accomplish the Seller's objective. See: www.Bsalesgroup.com
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