A business is a tricky thing to plan. First, the busines is a thing in motion rather than an asset at rest. Second, businesses are just a hard asset to value appropriately. Does your retirement plan and maybe your estate plan for your heirs rely upon the business?
For a sobering problem many business owners end up facing when it comes to valuing their business, be sure to read a recent article in Forbes titled “Is Your Business Worth As Much As You Think? Many Aren't.”
At the core of the article is an interpretation of findings in recent released by Pepperdine University in its 2014 Capital Markets Report.
The key finding: buyers and sellers of businesses cannot agree on how much they are worth.
Instead of negotiating back and forth to an eventual middle ground value, about 1 in 3 engagements fell through without any sale at all.
Now, keep in mind that it is always in the nature of high-pressure deals to come to such divisive and decisive ends. However, all the same there is a lesson to learn when so much is at stake, whether in Overland Park or elsewhere.
What is your business worth and how do you prove it? How do you approach the sale and how do you structure your assets thereafter? This can be a rather complex transaction. Putting it into the proper context and value is essential both in the beginning and the end of the process.
So, again, what is your business worth?
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.
Reference: Forbes (March 2, 2014) “Is Your Business Worth As Much As You Think? Many Aren't”