When to Value My Business

When do I need to have my business valued, and what is involved?

Business valuation is both a goal and a set of procedures employed to estimate the fair market value of a business. Business attorneys use company valuation appraisals in a number of contexts. Valuation is used by sellers and buyers to determine the price to offer or to pay in the sale or purchase of a company. The same valuation tools are often used by business appraisers in estate planning, to allocate business purchase price among business assets, establish a formula for estimating the value of partners' ownership interest for buy-sell agreements, and many other business and legal purposes. For instance, during shareholder disputes, sometimes the value of the company must be determined at a past point in time to determine damages. Often time a conversion of a "C" corporation to an "S" or Sub S corporation is advisable and a valuation of the business could be needed. In two contexts from his practice, Attorney Morse has recent examples of working with business appraisers: 1) in having a minority shareholder stock valued for purposes of negotiating its sale to the corporation and 2) in another matter to determine the value of successful business for its sale.