Business’ interests (i.e shares of stock) can be traded in public markets such as the NYSE or NASDAQ. When this is the case, determining the value of a business can be an easy task. But most businesses are privately owned. That’s when determining its value becomes a challenge.

As financial professionals, we often hear the question, “How much is my business worth?” or “How much should I pay for that business?” While we may hope to provide the client with an informed answer, there is very rarely an easily obtained answer to this question. Today, there is an increasing sophistication of owners of closely-held businesses as well as certain changing economic and social factors that have combined to force a shift in the evolution and development of valuation theory from being a nuisance to becoming a necessity.

 

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The applications of business valuations are numerous: mergers, acquisitions, spin-offs, IPO’s, allocation of acquisition price, adequacy of life insurance, liquidation or reorganization of business, litigation, buy-sell agreements, divorce, minority shareholders’ interest, compensatory damages cases, financing, insurance claims, employee stock ownership plans (ESOPs), estate and gift taxes, incentive stock considerations, charitable contributions, return on investment, government actions, etc.

In M & R CPA Services, PSC, we are highly trained in valuation theory. Therefore, we can provide assistance to our clients when the above questions come up.

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