Why is a Business Valuation needed when conducting a business merger or sale?
There comes a time when business people have to make a choice about the future of their enterprises. Some of them consider selling their businesses while others would make merging with another company one of the options on the table. During such a time, a business valuation becomes crucial to the company and its shareholders. Determining what a business is worth is however not only crucial to the company about to be sold or merged with. On the contrary, having a business valued offers considerable interest to the parties considering merging or buying out the business. In this article, we will look at a few reasons why this is true.
What to do if you are an overseas investor looking to buy a business in Western Australia
Purchasing a company is a risky investment anywhere in the world, but more so when you are a foreigner looking to buy a business in Western Australia. Business risks are greater for overseas investors thinking of buying a business or a property in the area because they suffer the burden of greater due diligence. Before the sale of a business, its proprietors are responsible for it. Once a legally binding contract is signed, however, those responsibilities fall onto the new owner or investor. This is the reason why investors should ensure they follow each of the steps outlined below before deciding to purchase a business in Western Australia.
5 Key Elements of a Successful Merger or Sale
Good businesses do not stagnate, they grow and expand the breadth of the good and services they offer. Business owners recognize this fact and opt, every once in a while, to engage in corporate restructuring to enable the survival or rejuvenation of their organizations. They may choose to merge or acquire another business, or simply sell their companies to others. With a merger or sale, several key factors play a factor in whether the transaction is classified as successful or not. Read on to find out which five elements are attributable to successful mergers and sales.
How to protect your business from a divorce proceeding
Many people enter marriages with a thought for living happily ever after with their partners, but more often than not, they end up disagreeing over assets in their divorce settlements. In fact, statistics show that almost six in every first marriage end in divorce, whereas the number is higher (about 70%) for second and third marriages. That means that as blissful as marriages are, it is good to ensure you have a backup plan to protect your interests from your partner in case you might split up years down the line. Whether you own an entire enterprise or a small stake in a company, here are a few ways you can use to protect your shares from your spouse before and during divorce proceedings.
Understanding Valuation Issues During a Shareholder Dispute
The shareholders in a company determine the direction a business takes in its endeavors. They either vote the business in or out of a situation, contract or decision. Sometimes, however, shareholders may disagree on a major aspect of the firm, leading to a case of dissenting shareholders. At other times, those who own minority shares may feel that the decisions being made by those who own controlling interest may be in poor judgment, fraudulent or damaging to the business. These minority shareholders could file to leave the partnership or dissolve the enterprise because of their beliefs. In such a case, it would be necessary to sell the shares of the party in contention and recompense them. Selling of shares as a result of a shareholder dispute is not as easy as it sounds, however. There are issues surrounding the valuation of these blocks which makes determining their worth harder than the customary business valuation.
How a Business Valuation can help you understand the worth of your business
It is important to know the true value of your business at any given moment in your entrepreneurial career, but more so when you want to take your company public or sell out to a competitor. Knowing what your firm is worth could help you determine what a fair offer for your company is, or what severance package would be suitable to give a partner who is thinking about leaving your firm. As a business person, you should understand that there is no one way to determine the value of an enterprise. One person would look at the income of his firm and base his valuation on that. The only drawback to this method is that it does not take into account the trend of the future earnings of the company and is therefore rarely a true reflection of the current market value of the enterprise. You could alternatively choose to assess the market in which your product operates to determine what your firm is worth. Unfortunately, with this method, you would leave out the other factors that determine the success of your firm. Using your company’s assets as a measure of value would also be inaccurate as it wouldn’t take into account current and future liabilities. For an accurate depiction of what price tag to assign your company, you should try getting a business valuation from a CPA, accredited valuation specialist or investment banker. Here is how a business valuation can help you to better understand the worth of your enterprise.
How to ensure you get an Independent Business Valuation
The question of how much a business is worth will always come up at one point or another. That is a universal fact for all business owners. Regardless of the size, enterprises will always be held accountable for their performance and worth by their stakeholders and in some cases, even by potential owners. Informal business valuations, where a firm owner considers the firm’s market cap, income or asset value in determining the firm’s worth are generally acceptable valuations when dealing with minor business agreements. However, if you’re looking for investors for your business, getting an independent valuation is an ideal way to value your business. But how do businesses get formal valuations from independent appraisers? We look at how to do that here.
How long does a Business Valuation take?
At one point or the other, an entrepreneur may find himself in need of a business valuation. Valuations are the estimates of a business’ worth as assessed and reported by a professional. Business owners typically get valuations for their enterprises when a partner leaves the firm, or when they want to sell their companies or take them public. As with all reports in the business world, this one takes time to conduct and report accurately. However, not all valuations take the same amount to compile. Some businesses may wait longer to get an estimate of how much they’re worth than others after engaging a professional firm. Here we look at why this is.
Top 3 fundamental measures to undertake when transferring interest to a family member
One of the facts that remains unchanged about the business world is that everything is ephemeral. There comes a time in a business person’s life when you want to retire from a business, or to simply leave it whether for financial or personal reasons. This is usually hard to do particularly when you want to leave a legacy to your family. In such a case, transferring interest is usually a good way to leave your loved ones a stable and secure income source. Interest refers to the percentage of stake you have in an LLC. Here are three steps you should follow when you want to transfer your share of ownership of a firm to your family members.
5 steps to manage a smooth business transition following the departure of your business partner
When partners first get into a business together, they aim for longevity. They usually have similar goals and a vision for their product. However, over time, those interests may change. One business partner could start a family and decide to stay home to care for them. Another could suffer an injury or contract a disease that forces him to re-evaluate his business stance. When one of these circumstances or any other one forces one partner to leave an enterprise, it is usually up to the remaining partner or partners to determine the next step for the company. If your partner has left the firm, here are five actions you can take to ensure the smooth transition of your business.