June 30 , 2022

Why Understanding Your Company's Valuation is a Key to Exit Planning

You’ve put in the hard work and dedication into building your business, but what if you’re looking for someone else to take the reins? If you're ever thinking about selling your business, you’ll need to know how much it's worth. Burns Valuation Consulting in Roswell, GA and their valuation and exit planning services can provide a good starting point for negotiating with potential buyers and help them determine how much of a risk they're taking on by investing in your business. Knowing your company's worth can also come in handy in difficult situations, such as being faced with a legal issue, such as divorce or shareholder disputes.

How do you go about getting a valuation for your business?

If you're looking for an accurate valuation for your business, you'll need to hire a professional, independent business appraiser like Burns Valuation Consulting in Roswell, GA. If someone wants to buy your business, they will want to see this information and that it comes from an unbiased and honest evaluation of your company. This person will look at various factors, including your financial statements, the value of your assets, and the current market conditions to come up with a fair estimate of your company's worth. This can be a complex and costly process, so be sure to research and hire a reputable appraiser. It's important to note that there are different types of business valuations, such as a fair market value or a strategic value, so be sure to discuss with your appraiser which type of valuation you need.

What are some common mistakes people make when understanding their company's worth?

It's important to be realistic when conducting a business valuation and understand that your company is worth what someone is willing to pay. One of the most common mistakes people make is thinking that their business is worth more than it is. Often, business owners have a sentimental attachment to their company, which can cloud their judgment regarding its value. Another common mistake is not considering all of the factors that go into a valuation, like business debt, outstanding contracts, and the current market conditions. By overcoming common mistakes and working with a professional appraiser, you can truly understand your company's worth.

How is understanding your company's valuation help a key to exit planning?

Understanding your company's valuations is pivotal to your exit planning because it will give you a good idea of how much your company is worth when selling your business. An accurate valuation will allow you to enter into any negotiations with reasonable numbers in mind. For example, if you're looking to sell your company, a buyer will want to know what they're getting in return for their investment. If you clearly understand your company's valuation, you'll be able to provide them with a fair price and avoid any potential disagreements down the road. The same goes for securing funding from investors or lenders. If you have a good idea of your company's worth, you'll be able to ask for the appropriate amount of funding and avoid taking on more debt than necessary.

Whether you are selling your business to retire to move on to the next part of your career, it's essential to understand your company's worth. This information can be used to negotiate with potential buyers. Understanding your company's valuation is a vital part of exit planning and can help you avoid potential problems down the road. By understanding the process and being aware of common mistakes, you can ensure that you get a fair and accurate valuation for your business so that you can your buyer can settle on a fair price you both agree with.

Contact Brad Burns CVA CFA at 770-380-2406 or for a free consultation.