Reasons for Business valuation

Performance evaluation is a requisite for every person. A college or school student has to go through exams and then only he is declared proficient in his field of study and given a certificate and that provides a value in terms of grades or experience. Similarly, every person working in the corporate sector has to go through a performance evaluation very often to check the way the employee performed the tasks given to him. Whether he should be retained or let go or should be provided with some training; whether he deserves a salary increase or bonus, all these questions need answers and can be derived from a performance evaluation.

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These periodic evaluations are critical to all businesses and place of work and education. Similarly, there are times the business itself needs to be evaluated to decide a value or its worth. Just like a person a company can also be quantified in terms of finance, that includes the value of all tangible and intangible assets and liabilities. There are many reasons why this valuation is critical.

  1. If the business needs to be sold for any reason. Of course, the founders work hard to create a business from scratch, but there comes a time when they need to retire may be due to old age or due to health reasons.
  2. Due to a divorce, the business may have to be sold.
  3. The business may have to be sold for family reasons when it is a family owned company and then there are differences between the various members and they all want to separate.
  4. If for family reasons you need to move away from the area.
  5. Due to death of the owner or one of the partners.
  6. If there are plans for expansion and the existing value has to be determined.
  7. For taking a loan or for mortgaging some part of the business assets.
  8. If there are more shareholders joining or you want to change the shareholding pattern.
  9. If one shareholder wants to exit and the others want to buy him out.

Regardless of the reasons, a company may decide to go in for valuation and then the business can find out its worth in financial terms. There are certain international standard methods that are accepted everywhere and bigger companies prefer to go to a reputed company and accept their valuation results. So hire a professional and then ensure that your business gets the best assessment possible.