5 Reasons to Know the Value of your Company

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By Eva Lang - Business appraisers know how important it is for owners of closely held companies to have a business valuation. It is sometimes more difficult to convince the business owner. The American Society of Appraisers (ASA)recently issued five tips for business owners on the need to have a current business valuation, noting how essential it is to many management decisions.

Five reasons to have a business valuation:

1. Know what your company is worth. Many business owners have no idea what their business is worth.

2. Understand where your company fits in your market. A business valuation can include research and provide an explanation of your specific industry, placing your company in the competitive landscape of your specialized market. It will also tell you the market price of publicly traded companies engaged in your line of business.

3. Learn the financial condition of your company. Business owners may think they understand the financial health of their companies, but having an independent review that includes intangible assets can confirm or deny this.

4. Be ready to make fast decisions on buying, selling and mergers. If you are faced with the option to buy, sell or attract capital for your business, you may not have time to wait to have a business valuation completed.

5. Stay current. It is important to get regular business valuations because your company, your industry and the economy are continually changing.

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