What are Business Valuations?
Business Valuations are written studies that let owners or interested parties know what the ongoing value of a business is. This knowledge can be used for many different purposes which include; What Are a Few Major Reasons to Do Business Valuations? Anytime knowing the true value of a business is important, such as:
- The general economic outlook and the conditions of the specific industry
- Charitable Contributions
- Gift taxes
- Estate planning
- Taxation
- Purchase Price allocations
- Taxation
- Collateral Valuations
- Capital Infusions
- Shareholder Transactions
- Buy/Sell Agreements
- Sales and divestitures
- Mergers and Acquisitions
- Transactions
- Regulatory
- Employee Stock Ownership Plans
- Employee benefit pans
- GAAP valuations under FASB 141 and/or FASB142
- Litigation
- Divorce
- Fairness opinions
- Expert testimony/litigation support
- Solvency/Insolvency opinions
- Determination of net operating loss in bankruptcy
- Determination of liquidation value in bankruptcy
The nature and history of the business
Professional business valuations are performed by qualified and certified experts who are licensed practitioners in this field. Over the years the following components have been established to be essential elements in a Business Valuation. By following a strict protocol and analytical process Valuation experts study all the key aspects of a business to determine it’s likely value going forward.
- The general economic outlook and the conditions of the specific industry
- The book value of the stock
- The financial condition of the company
- The earnings capacity of the company
- The dividend paying capacity of the company
- Whether the company has goodwill or other intangible value
- Previous sales of stock
- The market price of publicly traded companies who are engaged in the same or similar lines of business.