Businesses appraisals are simply the economic analysis or professional engagement to execute business valuation in order to find out 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 are an established business and need to provide either quarterly or yearly updates to investors or stakeholders, this can give them 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. You might find the opportunity to sell or merge which must be quickly decided. As a matter of fact, having updated business appraisal will allow you to make the most of every opportunity.
Reason number 4. To be able to figure out the buy-in price, you need to take on a new partner and have to know the worth of the business.
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. If you need money from the bank, one thing that can help them make a fast decision to do so is by presenting your business appraisal which if accepted can be used to build or expand new facilities.
Reason number 7. Business appraisal is vital as well in knowing 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’s possible to identify whether the business is growing, declining in value or stagnant or not.
Never forget about appraisals when to start up a business.