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Business Valuation Guide

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10 Reasons To Have A Business Appraisal


 

Businesses appraisals are the economic analysis or professional engagement to be able to carry out business valuation to be able to determine the actual worth of the business, certain business assets or professional practice. They're an important tool in the arsenal of any business owner and have to be taken into consideration from the very beginning throughout the lifecycle of the business.

 

Whether you believe it or not there are plenty of reasons why it is essential to have certified business appraisal and these are.

 

Reason number 1. Your business is currently in startup and you must value it to know how much of it you would need to give to your investors in exchange for the seed money.

 

Reason number 2. If you are an established business and need to provide either quarterly or yearly updates to investors or stakeholders, this can give them a clearer picture of the business' financial status. For this, it is going to show them the actual worth of the investment they made.

 

Reason number 3. You may find the chance to sell or merge which must be quickly decided. As a matter of fact, having updated business appraisal will allow you to make the most of every opportunity.

 

Reason number 4. You may want to take on a new partner and need to know the worth of business to be able to figure out the buy-in price. Read https://www.reference.com/business-finance/business-valuation-formula-b91bc255ff6adcf9 to gain more info about business appraisal.

 

Reason number 5. With the sheer number of fundraising options in which small businesses can take, it is so important to be aware of the value of your company prior to starting fundraising.

 

Reason number 6. You might want to build or expand new facilities and presenting your business appraisal to the bank can help a lot in making them decide to lend you money.

 

Reason number 7. Business appraisal is important as well to be able to know the annual per share value of Employee Stock Ownership Plan or simply as ESOP. ESOP is being used when you like to share ownership of corporation with employees.

 

Reason number 8. For gift tax planning purposes such as donation to a charity, interest to family members, transfer to intentionally defective grantor's trust and the likes, it is crucial to have an accurate business appraisal.

 

Reason number 9. Appraising a business is also crucial for a number of litigation support purposes like for instance, determining economic damage, uncovering value of a business in partnership or shareholder dispute, frauds, lost profit and so on.

 

Reason number 10. With such, it will be feasible as well to identify whether or not the business is growing, declining in value or stagnant.

 

Never forget about appraisals when to start up a business.