Remember when you wanted to know the value of that sports trading card or a rare stuffed animal? In the 1990’s, if your friend or colleague told you the Michael Jordan autographed rookie card was worth $2, would you believe them? The reasonable answer is “No,” right? To determine a reliable estimate of value for a rare trading card, you would consult the value catalogs you could pick up at the local toy store or retailers specializing in trading cards. They were considered a trusted estimate for the value of the trading cards bought and sold in the market.

Many closely held business owners underestimate the benefits of a professional business valuation because they don’t anticipate selling their business. However, if the business has family members working in the business or they intend to transfer ownership at some point in the near future, a business valuation can be very valuable.  Whether you intend to transfer the business internally to a family member or colleague or sell the business,  it will be a tough transaction without a well qualified professional who can help you understand the value of the business.

Knowing when to obtain a business valuation can be tough. Below are 3 common triggers for a Business Valuation:

  • Gifting – transfer of shares could have gift tax implications if the value of transfers exceeds the annual gift tax limit. Instead, the actual amount of the gift can be determined, documented, and in some cases planned by a timely business appraisal.
  • Estate Planning – medium sized businesses potentially exceeding the current lifetime estate exclusion.
  • Mergers and Acquisitions Consulting – considering the purchase of a business and need a well-qualified business valuation professional to weigh-in based on a review of information related to the subject entity.

Remember, business valuation is not an exact science. It’s based on judgment, experience, and relevant information and requires professionals who are well qualified, with significant experience in evaluating all types of organizations. When facing a potential buyout or other change in business ownership, you need a qualified business valuator to protect your interests.  As a full-service CPA firm, TD&T can not only assist you with the challenges related to valuing your business, but can also provide services related to your accounting and tax needs. Give us a call today!