When you need a business valuation: 8 situations

A valuation is often put off until the moment of sale. But it is needed earlier: any decision with the value of the company at its centre is better made with a number than on a feeling.

Eight situations

• selling the business or part of it: you need a price guide and an understanding of what will lower it;
• bringing in an investor: the valuation decides how much equity you give for the money;
• a partner joining or leaving: you need the price of the share and a method both sides accept;
• splitting the business between co-owners;
• passing the business to the family or heirs;
• a loan or collateral: the bank looks at the value and the resilience of the business;
• a share or an option for a key employee;
• a strategic choice: keep growing the business or sell.

Why it is better in advance

A valuation a year before the decision shows the weak spots while they can still be fixed: owner dependency, customer concentration, the quality of the accounts. A valuation on the day of the negotiation only records what the buyer already sees.

Which valuation to choose

For a decision and negotiations an indicative range and a review of the factors are enough. For a court, tax authorities and regulators you need an official document from a licensed valuer. ValueUp provides the first and does not replace the second.