Business appraisals are actually the economic analysis or the professional engagement to carry out business valuation in determining the actual worth of the business, certain business assets or professional practice. They’re an important tool in the arsenal of any business owner and have to be taken into consideration from the very beginning throughout the lifecycle of the business.
There are great reasons for why it’s important to get certified business appraisal and these are.
Reason number 1. Your business is in startup stage and you have to value it to be able to determine how much of it you’ll need to give to your investors in exchange for the seed money.
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Reason number 2. If you have established your business and have to provide either quarterly or yearly updates to investors or stakeholders, then this can give them with a clearer picture of the business’ financial status. Therefore, this shows them what is the actual worth of their investment.
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Reason number 3. There’s a chance that you would want to sell or merge which must be quickly decided. Having an updated business appraisal lets you to make the most of every available opportunity.
Reason number 4. You may want to take on a new partner and need to know the worth of business to be able to figure out the buy-in price.
Reason number 5. With the sheer number of fundraising options in which small businesses can take, it is so important to be aware of the value of your company prior to starting fundraising.
Reason number 6. You have to build or expand new facilities and present your business appraisal to the bank which can help them decide whether to lend you money or not.
Reason number 7. Business appraisal is important as well to be able to know the annual per share value of Employee Stock Ownership Plan or simply as ESOP. ESOP is being used when you like to share ownership of corporation with employees.
Reason number 8. For gift tax planning purposes such as donation to a charity, interest to family members, transfer to intentionally defective grantor’s trust and the likes, it is crucial to have an accurate business appraisal.
Reason number 9. The appraisal of a business is critical as well for litigation support purposes like for instance, determining economic damage, uncovering value of a business in partnership or shareholder dispute, frauds, lost profit and so on.
Reason number 10. With such, it will be feasible as well to identify whether or not the business is growing, declining in value or stagnant.
Regardless whether you have a business or just starting up, see to it that it has an accurate appraisal.