Why do I need a business valuation, I’m not selling!

“WHY DO I NEED A BUSINESS VALUATION, I’M NOT SELLING!” There are many reasons why businesses (including professional practices) should have an INDEPENDENT business valuation prepared: Buy/Sell Insurance – do you really want to be in business with your business partners life partner (or Trustee)? Or tied up in protracted, costly and soul destroying legal proceedings […]

“WHY DO I NEED A BUSINESS VALUATION, I’M NOT SELLING!”

There are many reasons why businesses (including professional practices) should have an INDEPENDENT business valuation prepared:

1. Buy/Sell Insurance – do you really want to be in business with your business partners life partner (or Trustee)? Or tied up in protracted, costly and soul destroying legal proceedings about extracting the deceased or incapacitated persons market value entitlement. Sadly only about 38% of Australian SME’s have Buy/Sell Agreements in place, n.b. Many Insurers insist on regular updates of the Business Valuation as a condition of the Policy,
2. Retirement Planning – If you are relying on your business to fund your retirement do you know what sale value the business needs to achieve so that you can enjoy a quality lifestyle? What “Gap” needs to be bridged before putting the business on the market? Do you need to grow before you go? Knowing the business’ current value is a great starting point for business growth strategic planning,
3. Succession Planning – If you are introducing successors into the business, with either external or internal funding requirements, a professional and independent valuation is integral to the transaction. An existing ‘partner’ may be selling down all or part of their equity, a “Young Gun” may be having the “Golden Handcuffs” put on, an independent but mutually beneficial 3rd party may be considering a joint venture as a prelude to merger, I.e. the “engagement” prior to the “marriage”,
4. Growth Funding – Third party finance applications are greatly enhanced when they are inclusive of not only a One Page Business Plan, a 3-Way Cashflow Projection but also an independent Business Valuation Report. Accountants in all States are telling us how difficult it is becoming to raise additional finance for their clients, 
   
5. Capital Gains Tax Planning – Planning in advance (as opposed to retrospectively) for the potential impact of CGT is a prudent business strategy. How will the proposed sale/restructure/merger of an interest in the business affect the tax position? Will the business still be eligible for the Small Business Exemptions and Concessions? What are our options?

REMEMBER: Hope is NOT a strategy!!!

George Stubbs – Valuations
M: 0419 884 758
E: george@jadejapartners.com