What Do You Know About Appraisals

Why Business Appraisal Is Important?

Businesses appraisals are the economic analysis or professional engagement to be able to carry out business valuation to be able to determine the actual worth of the business, certain business assets or professional practice. They are vital tool in arsenal of any business owner and need to be taken into account from the very start throughout the lifecycle of the business.

As a matter of fact, there are good reasons for why it is important to get certified business appraisal and these are:

Reason number 1. The fact that your business is in startup phase, you should value it in order to know how much of it must be given to your investors in exchange for the seed money.
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Reason number 2. Say that you have successful established your business and need to show them either quarterly or yearly updates to investors or stakeholders, this can be beneficial to them in having a clearer picture of the financial status of the business. This therefore shows them what’s the actual worth of their investment.
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Reason number 3. You might find the opportunity to sell or merge which must be quickly decided. It will let you make the most of every available opportunity by having an updated business appraisal.

Reason number 4. You might want to take on new partner and have to know the worth of the business to figure out the buy-in price.

Reason number 5. With the sheer number of fundraising options in which small businesses can take, it is so important to be aware of the value of your company prior to starting fundraising.

Reason number 6. You have to build or expand new facilities and present your business appraisal to the bank which can help them decide whether to lend you money or not.

Reason number 7. In knowing the annual per share value of Employee Stock Ownership Plan or simply as ESOP, business appraisal plays a vital role as well. When you want to share ownership of corporation with employees, ESOP is used in it as well.

Reason number 8. It is important to have an accurate business appraisal for gift tax planning purposes just like donation to a charity, interest to family members, transfer to intentionally defective grantor’s trust and the likes.

Reason number 9. Appraising a business is also crucial for a number of litigation support purposes like for instance, determining economic damage, uncovering value of a business in partnership or shareholder dispute, frauds, lost profit and so on.

Reason number 10. With this, it is going to be possible to quickly identify whether the business is growing, declining in value or stagnant or not.

Never forget about appraisals when to start up a business.