Tweet

Top Reasons To Get a Business Appraisal

Guest post by: ray haiber

Article Overview: Provides a list of some of the top reasons when and why you should consider having a professional business appraisal performed on your small business

Top Reasons To Get a Business Appraisal

As a professional small Business Broker I am occasionally asked by some small business owners when and what are the appropriate times or reasons to have a formal business valuation or appraisal performed. Although I can often give small business owners a general idea (using traditional pricing guidelines) about what their existing business might be worth for selling and listing purposes, there are many times when having a more formal business appraisal performed by a professional appraiser is much more appropriate and prudent. Below you will find a list of some of the most common scenarios that you should consider having a professional and independent appraisal performed on your business. Legal & Litigation Issues: Unfortunately it’s a fact of life that if you own a small business there is a decent chance at some point you will need to have a business appraisal performed for some legal purpose. In my experience as a small business broker the most common legal issues that precipitate the need for an appraisal are personal divorce and partnership disputes. Less common reasons would include shareholder disputes, the establishment of an ESOP (Employee Stock Ownership Program), and eminent domain related issues. Regardless of the specific legal issue, an appraisal report created by an independent and professional small business appraiser is often one of the most important tools used (and often required) to help settle or resolve small business legal issues. Tax Related Issues: Tax related issues such as gift and estate planning will require a detailed business valuation report to be prepared and updated on regular basis. Generally it’s considered prudent to have a valuation prepared in advance to help address the inevitable transfer of ownership that will occur at some point down the road as well as possibly help mitigate any tax burdens due to the owners passing. It’s prudent to always consult with your financial adviser and CPA as well when doing estate planning. Business Financing: I can tell you from experience that most small business lenders will automatically require a detailed business appraisal performed as part of their due diligence before approving financing for any number of reasons. A third party and professional appraisal can also be an important tool to have on hand when an owner is seeking new partners or private investors to help grow the business. Having a recent appraisal report included in your presentation package could help validate your business model and show your potential new partners or investors that you are well organized and mean business. Business Sale or Acquisition: Whether you are selling or buying a small business having a professional and independent appraisal or valuation performed can be very helpful indeed. For sellers an appraisal report can be used to help validate and support the asking price of your business which will ultimately maximize your return on investment. For buyers an independent appraisal report can potentially be very helpful when negotiating the final sales price and terms of a business acquisition. It can also give you peace of mind that you are not grossly over paying for a business. A third party appraisal report is also indispensible when determining the value of a business in preparation for negotiating the terms of a potential partner buy out as well.

Related Articles
  Getting the Performance Appraisal Right
  360 Degree Appraisals
  Why an appraisal is critical to a seller when selling their business
  How To Run A Staff Appraisal
  Appealing Your Property Taxes in District Court
  Appealing Your Property Taxes
  Are Organizations Utilizing Employee Performance Appraisal Systems optimally?
  What have I learned in 6 months of management? Part 3
  A Guide for Employee Appraisals
  Performance Appraisal More Powerful with a ResultsOriented Job Description
  Tips & Tricks for Appealing Property Taxes
  How to make vibrant organization based on performance appraisal system
  Dropped Balls
  Performance Appraisals
  Feedback Say it Somehow
  Equipment Financing Canada – One Big Mistake Not to Make
  How Top Management Views Performance Appraisal Systems
  Designing A Performance Management System
  The #1 Guide to Performance Appraisals
  Understanding the SBL . The Canadian Small Business Financing Loan Is A Winning Finance Strategy

Article Tags: business appraisal, valuation



Related Forum Posts
My entry - 1. The Best Business Books Ever: The 100 Most Influential Business Books You'll Never Have Time to Read - this is a fascinating book about the history of Business theory, and I'd recommend it to anybody. 2. The Big Book of Small Business: You Don't Have to Run Your Business by the Seat of Your Pants, by Tom Gegax. Ditto. 3. PADI: The Business of Diving Book Okay, so this book won't be of use to anyone who doesn't want to start a scuba store, but I did, and this book was of course invaluable to me in reaching that goal.
Re: 10 Reasons Who Startups Fail & Book Recommendations - Great post,but please edit the headline. I presume it is "10 Reasons Why Startups Fail & Book Recommendation
Exclusive: Interview with Results - Hi Forum Members, I'm helping start up a Business Coaching and Consulting company here in Toronto, Ontario, Canada (a Subsidiary of RSC Business in Los Angeles). As a Research and Development Intern I am required to practice my listening and interview skills by surveying Small and Medium Businesses on thier Business. This Survey is designed by RSC Business to also assist the Business being interviewed more insight into their own business. I am looking to interview about 30 businesses across North America over the span of 3 months. At the end of these interviews I will be publishing a report of the results and they will be made available for free to the Interviewees. The Report data will include responses from a minimum of 100 interviews. I would like to extend this opportunity to members of the Forum. If you would like to have this short 20-30 minute interview conducted on your Business and you reside in North America please send me an email or PM. Please contact me at andy[at]jvprosperity[dot]com to arrange our interview and to get free access to the results when they are published.
Re: HOw to market a B2B consulting company - [quote="zohahunt77":428owzbi]Hi, I was wondering if anyone can tell me the difference between B2B and B2C. I don’t know about b2b marketing but I have done marketing so know things about it. I will suggest you to take online services which will spread your business all over web network. Online marketing is the best way to market any business.[/quote:428owzbi] B2B = Business to Business - You are marketing to other businesses. B2C = Business to Consumer - You are marketing to consumers.
English teachers learn Japanese as Interns - Yasunori, what about the many students that leave N. America to teach English in Japan. They may want to learn Japanese (maybe Business Japanese is a bit different) and the Japanese Business Culture.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Google Panda and Your Search Engine Rankings

B2B PR – Planning for Success

BUILDING A HIGH PERFORMING TEAM

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.