As a business owner, you not only have strong sentimental connections to your business, but a vested financial interest.
Naturally, you’d want to set up your business transactions in a way that fetches you the most lucrative value, and accomplishes your retirement goals.
Last-minute cosmetic changes won’t benefit you in the slightest. If you are preparing for an important business transaction, it is crucial that you consult with a business valuation expert well in advance.
VSP can work with you and your team to provide independent business valuation services in the GTA to ensure that you receive a fair price and don’t ‘leave money on the table’. Call (905)-305-8775 and ask about how our transaction advisory services can benefit your business.
In this article, we will go over how to construct a strategic plan before a business transaction, how a business valuation can help, and why VSP should be your top choice for a valuation.
Preparing a Plan For a Huge Business Transaction
Prior to a business transaction, you should have a strategic plan with a business valuation to ensure the greatest value on your end of the deal. Realize that the price of a business transaction is determined by its sale on the open market. The key aspect to keep in mind: Appraise the asset you are trying to sell and have a realistic expectation of its value.
Having a concrete plan and an independent business valuation will provide you with all the necessary insights to make strategic moves that bode well for the future.
When is a valuation really required? While there isn’t an “ideal” time, it’s always best to have it done at least two years prior to an intended sale.
Valuations are required for purposes of an actual transaction (e.g. purchase, sale, shareholder buyout, donation, etc.) and even in situations where an actual sale is not being contemplated (i.e. tax planning, share reorganization, insurance coverage, matrimonial separation, etc.).
Why a Business Valuation is the Key Ingredient in Your Transactions
Without a reliable third party valuation, the business owner may arrive at an unrealistic sense of how much the company is worth, which will likely be at odds with what a potential purchaser arrives at.
A business valuation report is the middleman that bridges this expectation gap.
Determining the fair market value of your business is a process that involves several steps. Generally, the first step involves a review of the company’s historical and projected financial statements and the various internal and external risk factors affecting the business.
A business valuation report contains important information you can refer to in your negotiations to gain leverage.
VSP has developed a formalized process to assess the key value drivers for your business. We provide recommendations on how to exploit those key value drivers to enhance value.
How else can you benefit from a valuation report? Based on the insights therein, you can make informed decisions regarding succession planning, pre-sale planning, life insurance coverage, trustee protection, and shareholder disputes, among others. A business valuation report is also a critical document to assist in wealth management.
Moreover, having a business valuation report will give you peace of mind prior to a big transaction. You can move forward in confidence.
Get the Most Out of Your Transactions With VSP
It’s all about timing and maximizing the value of your business takes time.
VSP offers professional, independent and supportable valuation services that will help you make smart and informed business decisions.
Contact VSP to learn how we can help you protect and secure your company’s future.