A business valuation is considered to be the process in which you want to determine the fair economic value of your business. A business valuation can further be used to establish the fair market value of your business for many reasons such as the sale of your business, wanting to establish a partnership and in some cases for divorce proceedings. A business valuation is usually put together to provide a more accurate picture of how your company is doing financially for present or potential investors. A business valuation can be based on the experience and relevant information of your business. You will usually need a professional such as a CPA or a CFP to do a business valuation.
The first benefit of a business valuation can help business owners establish the approximate fair market value of your business assets in case your business needs to be liquidated. The second benefit of a business valuation can help business owners determine an approximate value for each owner for their own personal purpose if the business is being held for the owners or the owner’s survivors. Finally, the third benefit of a business valuation can help you find out the approximate fair market value of your business of each owner’s interest in case your business is going to be sold. There are a few business valuation methods that can be used and those are appraisal business valuation, owner’s estimate business valuation, adjusted book value business valuation, and capitalization of income business valuation. If you are looking to find out how much your business is worth through a business valuation, contact a local CPA provider to find out which business valuation is best for you and your business.