Your business may represent the largest share of your net worth. You may be planning to sell the business and diversify the proceeds to provide for a comfortable retirement. But if you do not know the value of your business, how can you know if your retirement plans are realistic?
Book value is not a good measure of a company’s value. Book value may be the result of a long series of transactions and accounting estimates made over many years, under conditions very different than those occurring now. Book value reports what was invested in the business over time, not what it is worth today.
Rules of thumb are also unreliable ways to value a business. While they may provide a rough estimate of the value of businesses in a certain industry, they will likely miss the unique aspects of your business.
The best way to estimate the value of a business is to have it valued by a certified professional business appraiser.
Call us if you have questions about the value of your business.