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Business valuation is a very important aspect of buying or selling a business. The
main uses of business valuations can be listed down as follows: |
| 1. |
Provide a fair market value of a business as of a specific date in time |
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| 2. |
Annual "business check-up" for business owners to determine financial strengths
and weaknesses |
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| 3. |
Benchmark comparison for business owners to determine how the business is operating
compared to other similar businesses in the same industry (regionally and nationally) |
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| 4. |
Acquiring expansion capital through lending institutions and venture capitalists
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| 5. |
Business Planning and Value Enhancement - Determining the present value of a business
and setting goals over a period of time to increase that value |
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| 6. |
Valuing company stock for the development or annual review of an employee stock
option program (or bonus stock option plan) |
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| 7. |
Retirement planning |
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| 8. |
Merger or acquisition (buying or selling a business |
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| 9. |
Planning for an initial public offering of stock |
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| 10. |
Conducting a major strategic planning initiative |
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| 11. |
Seeking outside investors |
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| 12. |
Disputing conclusions of an IRS audit |
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| 13. |
Conducting estate or gift planning that involves company stock |
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| 14. |
Creating a company stock-option plan or other benefit plans that involve company
stock (such as ESOP or ESOT) |
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| 15. |
Breaking up a partnership (Partner buyout) |
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| 16. |
Getting a divorce |
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| 17. |
Entering bankruptcy |
