Top Reasons to Conduct a Business Appraisal

Business owners often shy away from conducting an appraisal of their business. This is typical because of the cost attached to the process. However, there are certain situations that a business could face that would make it necessary to appraise their business and have a firm understanding of its value. Read on to learn some of the reasons that you might have to conduct a business appraisal and some that make sense as a savvy business owner.

1. To Transfer or Gift Shares

Business appraisals allow shareholders to know the value of their shares and how much they can give as gifts to their children or others. In the US, gifts of shares exceeding a certain amount will be subject to taxation by the government.

2. Requesting for Investment Funds

A company that is looking for investors must have a clear knowledge of what their business is worth before asking for investment funds. While there are different metrics that can be used to determine value, an accredited, third-party business appraisal is usually preferred.

3. To Give to Charity

Companies who wish to give to charities are able to receive tax deductions for their generosity. However, in order to receive tax deductions, companies are usually mandated to conduct a business valuation.

4. For Divorce Proceedings

In many states in the United States, if you decide to get a divorce, your partner may be entitled to half of your financial assets. This could also include any shares in a business. In the event of a divorce, a business appraisal will need to be carried out to determine the worth of the business.

5. Legal Settlements

If a business loses a legal dispute, its insurance company may refuse to cover the payment. In that case, business interests may need to be sold to pay off the debt. A business appraisal will need to be conducted in order to sell these interests.

6. To Sell Thee Business

If a business owner decides to sell their business, he needs to know what the business is worth so he can decide what price to intelligently ask for. An unbiased third-party business appraisal will give him the info

7. To Plan for Death

Nobody can live forever. If you are a co-owner in a privately held business there should be an agreement in place that details what is to be done in the event of your death. Typically, this is covered in a buy-sell agreement. However, before a buy-sell agreement can be drafted, a business appraisal is typically conducted.

8. For Knowledge Purposes

Even if your business is not up for takeover or the subject of a legal dispute, it is always good to know what it is worth. This will help you plan for future moves with a clear vision of your assets and liabilities.

Business appraisals may be expensive, but there are many reasons why they should be conducted. Make sure you use a reliable professional to conduct a valuation for your business.

Whether you’re looking for a business appraisal in New Jersey, business appraisal in Connecticut, or anywhere in the US, let our business appraisal professionals at A. Neumann & Associates, LLC aide you in the process.