Valuation Of A Business Breaking Up Is Hard To Do

Whenever you go into business, you must plan for every situation imaginable, even the less than pleasant ones. A key component in ensuring you’re well prepared for just about anything is having a valuation done on your business. A business valuation is basically the process of determining the economic value of a business, or an owner’s interest in a business. Valuing a business is important because, let’s face it, sometimes breakups happen. If, for some reason, your business partnership comes to an end, having a business valuation will make the “break-up” process much easier. We often see business partnerships come to an end for a variety of reasons and we want to highlight some of the situations where businesses might be facing a breakup and where a valuation is necessary.

Things Get Ugly.

It might seem like a great idea at first to go into business with your spouse, best friend or even a former coworker, but going into business with someone you have a personal relationship with opens the doors for business and emotions to mix (which is not always a good idea). Sometimes things get ugly, partners decide to get divorced, maybe your co-owner isn’t as committed to making your business a success, or life happens and puts the future of your business in jeopardy. In such a situation, you’ll need to know the value of your business to determine how you should move forward. You might decide to buy out your partner, or you might decide to sell their share to someone else, no matter what path forward is best for your situation, a business valuation will be essential.

It’s Time To Sell.

Some people get into business simply to make it profitable and eventually resell. Others go into business with the hopes of passing it from generation to generation. Some people start a business but poor business tactics/ invention of new technology/ lack of customer retention causes the business to become a liability that needs more resources than the owner has in order to become profitable. If the time comes to sell that business, you need to have a business valuation done to know where you are in terms of a reasonable selling price.

Ownership Will Change.

There are multiple scenarios that might warrant the change of ownership in a business. If you’re creating a succession plan, or passing the business/shares of the business down to children, if a new owner is coming onboard or if a current owner wants to retire or get out of the business are just a few instances where ownership might change and a valuation be necessary. We know how confusing it can all get, and we’re here to help. Building a business takes patience and perseverance and you deserve to know the proper value for all of that hard work.

Whatever the reason for your business valuation, you need an experienced professional who has the knowledge, expertise and resources to give you the most accurate value of your business. Our valuations are performed in compliance with the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation (USPAP) as well as the Business Appraisal Standards of the Institute of Business Appraisers. This means you can trust that we will develop a defendable opinion of value for you. Reach out to the team at Murphy Business Broker – Raleigh and Wake Forest at (919) 719-2717 if you’re ready to take this important step as a business owner.