The Benefits of a Business Valuation

What is my business actually worth?

As a business owner, you’ve probably asked yourself this many times.  But have you ever stopped to really consider and understand the true value of what is likely your greatest asset?  Knowing the value of your business is critical to proper business planning and achieving personal goals.

Our client advisors understand the complex needs of business owners and will equip you with the foundational resources needed to grow or sell your business.  Knowing the true value of your business is essential for your business and personal financial planning.  Through a combination of our Business Valuation and GPS processes, we help you make informed decisions about your future.

Business Valuation : Why You Need One

  • To better prepare to sell your business – A valuation is necessary to give you a clear assessment of your businesses fair market value. Having a current valuation will allow you to set a realistic asking price and give you confidence in negations
  • To create a buy-sell agreement with business partners – A mutually agreed upon value is the starting point when creating a buy-sell agreement with partners.
  • To know the value of your largest asset and generate a more comprehensive retirement plan – Understanding the value of your business is critical to determining your Wealth Gap.
  • To ensure the business and your family are properly protected – A valuation may help an owner determine the amount necessary to cover their business interest value through key-man insurance if something were to happen to them.
  • To develop a business succession plan – Every owner will eventually exit their business. A valuation can help examine your current situation and reveal gaps that need to be addressed before exiting a business.
  • To more fully understand your growth potential – Before making a decision to expand or make strategic investments in a business, a business valuation can help examine near- and long-term strategies.
  • To attract investors or lenders and explore additional funding opportunities – Having a documented value can help when negotiating with banks or potential investors.
  • To build your estate planning strategy – The need for more complex estate planning will be driven by the value of your business. Transferring shares of the business to a trust or even gifting them will require a business valuation.

Business Valuation: How It Works

We partner with BizEquity, a global and patented leader in business valuations with over 33 million valuations completed.  This enables us to generate four distinct and useful estimates of value in addition to as many as 30 performance related metrics including Asset Value, Equity Value, Enterprise Value, and Liquidation Value.  Their process is based upon professional business valuation standards and revolves around both a Discounted Cash Flow (DCF) and Sellers Discretionary Earnings (SDE) methodology.  They account for multiple factors including:

  • All multiples
  • Profitability
  • Size adjusted and reflective
  • Discount rate and cap rate
  • Asset intensity
  • Key risk factors

Business Valuation : How Oakworth Can Help

It’s extremely important for you to know your business’ value should you have an opportunity to monetize your exit options.  Our business valuation process can not only help you quickly and accurately determine the value of your business for planning purposes, but it can also make your business more attractive to buyers down the road.

Here are some of the types of valuation reports we think are valuable to a business.

If you’re interested in learning more about business exit planning, view our webinar on demand, below: “Does My Business Need a Will?