What is a Business Worth?

The value, or worth, of an interest in a privately held company, as opposed to stock in a public company, is usually unknown because there is no active market to sell or trade that interest from which to ascertain or approximate the value. Getting a reliable, comprehensive, documented answer to this question is one of the most important financial issues you will face in the life of your business. Unfortunately, there is no accurate “rule of thumb” to determine the value of your business. In fact, determining the value of a closely held business is a complex and difficult art which requires extensive knowledge and experience as well as informed judgment.

When do you need a Business Valuation?

Most clients ask for a business valuation when their company is being bought or sold. However, the following are many reasons which may require you to have a business valuation.

Tax Planning and Compliance

• Estate planning issues, including gifting
• Employee stock ownership plan (ESOPs)
• Planning stock options to key executives

Mergers, Acquisitions, and Sales

• Buy/sell agreements
• Buying or selling a business
• Merging your business with another

Litigation or Arbitration

• To ensure fair insurance settlements
• Disruption of business
• Eminent domain proceedings
• Shareholder disputes
• Divorce proceedings

Financial Reporting

• Purchase price allocation
• Goodwill impairment testing
• Valuation of intangible assets and intellectual property

Trout, Ebersole & Groff, LLP’s commitment to personal, timely, and value-added services is the key to our success in providing business valuations to our clients.