Business Valuation

If you already own a business, at some point, you will leave that business. When that occurs, you will want to maximize the amount of money you can take from the business. Usually, the business is your single most valuable asset. Continued financial security depends on maximizing that value and converting it to cash. However, this will not happen all by itself. It requires planning and effective plan execution. To accomplish this goal you must:

Determine your ultimate objectives
Determine the current value of the business
Design and implement a plan to increase that value
Convert the business value to cash

The professionals at REAGAN Accounting and Consulting Group can help you plan for that day and, with the proper plan in place, ensure that you maximize your return on your years of hard work and success. To arrive at the correct plan you must answer three basic questions:

How much longer do I want to work before retiring or moving on to something else?
What is the amount of after-tax income I want each year after leaving the business?
To whom do I want to transfer the business-
- A current co-owner?
- A family member?
- A key employee?
- All the employees?
- A competitor?
- Some other company or individual?

SO,... WHAT IS MY BUSINESS REALLY WORTH? Ultimately, it is the amount to which you and a buyer agree. Before that buyer arrives on the scene, you should obtain an estimate of the business value.

AND JUST WHY SHOULD I BE INTERESTED IN ESTIMATING THE VALUE OF MY BUSINESS? There are numerous reasons. Several are listed below:

A contemplated near-term sale, purchase or merger of an existing business
An initial public offering
Buying or selling a partial interest in a business
Buying or selling 100% of the assets or stock of a business
Estate, gift & income tax planning
ESOP establishment and maintenance
Determining the proper amount of life insurance needed
To support shareholder buy-sell agreements
Avoid litigation
Ensure the succession of the business
Form a basis for quantifying damages or losses
Litigation, including divorce, and shareholder disputes

When buying a business, like anything else, the term buyer beware should be foremost in your mind. The performance of thorough due diligence is the single most important component in the process. Obviously, you should not overlook the importance of significant terms of a purchase agreement. Nevertheless, if you are buying thin air when you think tangible or intangible assets exist, you have a terminal problem that may lead to business failure. We have all heard of acquisitions that failed. You should make sure you do not join that group.

REAGAN Accounting & Consulting Group employs Certified Valuation Analysts who have the skills and experience necessary to properly value businesses and help you implement an appropriate strategy to achieve your objectives, whether you are buying or selling. We are a member of the National Association of Certified Valuation Analysts, and our experience in numerous purchase and sale transactions, and our service as a valuation Expert Witness in Courts of Law further enhances our qualifications to serve you.

REAGAN Accounting and Consulting Group, P.C.
2214 2nd Avenue North - Suite 100, Birmingham, Alabama 35203
Phone: 205-380-4200 | Fax: 205-323-9805 | E-mail: info@reagan-solutions.com