Unlike publicly traded companies, privately held companies do not participate in active trading markets, so the value of their stock is not readily available. An ownership interest in a privately held company often represents a significant portion of an individual’s estate and/or investment portfolio. Some of the most common reasons valuations are performed include: calculation of estate tax upon death, determination of value for gifting purposes, negotiate value in a purchase, sale or merger of business interests, and property distribution in a divorce. Other reasons valuations are performed to determine the entity or stock value include:
- Employee Stock Ownership Plans (ESOPs) need an annual valuation of the company stock
- Buy/sell agreements
- Partner/shareholder disputes
- Dissenting shareholder actions
- Damages for disruption of a business
- Split-up/spin-off of a division or a subsidiary
- Succession and exit planning
- Venture capital and other forms of capital
- Family limited partnerships
- Charitable contribution of privately held stock
- Actions in eminent domain
Possibly one of the best reasons for a business valuation is to use it as a management tool. The primary objective of every business, large or small, is to improve and maximize its value to the owners. Business valuations help to justify the time investment and the required capital. Valuations prepared periodically can also measure the progress toward obtaining management or company goals.
If you want to learn more about our valuation services and how we can assist you in assessing the value of your business, call us today.