Many business owners *think* they know the value of their business, so they don’t engage in a formal valuation exercise until one of their advisors tells them that it’s needed to satisfy a particular requirement.

The following are examples of when CEOs and CFOs will typically engage in the valuation process.

1. For potential sale or acquisition: If you’re considering selling your business or acquiring another company, a business valuation can help you determine a fair price for the transaction. It can also help you negotiate better terms and ensure that you’re getting a good deal.

2. For financing purposes: If you’re looking to secure financing for your business, a business valuation can help you determine the amount of equity you have in your company. This can help you negotiate better terms with lenders and increase your chances of getting approved for funding.

3. For estate planning: If you’re planning your estate, a business valuation can help you determine the value of your business and ensure that your assets are distributed according to your wishes. It can also help you minimize estate taxes and avoid disputes among family members.

4. For partnership disputes: If you’re in a business partnership and there’s a dispute over the value of the business, a business valuation can provide an objective assessment of the company’s worth. This can help resolve disputes and ensure that all parties are treated fairly.

5. For tax purposes: A business valuation can also be useful for tax purposes. It can help you determine the fair market value of your business, which can be used to calculate estate and gift taxes, as well as capital gains taxes if you sell your business.

6. For stock-based compensation: Section 409A of the Internal Revenue Code contains a framework for private companies to follow when valuing their stock. The value of a share of your company’s common stock also sets the strike price for stock options. An independent third-party 409A valuation can help to avoid penalties for shareholders.

7. For financial reporting purposes: A analysis of an acquired company and its intangible assets may be required for financial reporting purposes. Acquired assets and assumed liabilities are recorded on the balance sheet at their fair value as of the date of acquisition. If you already have goodwill on the balance sheet from prior acquisitions, you may need to have it tested for potential impairment.


Every business owner should know what their business is worth. Getting a business valuation is an important step in understanding the true value of your company.

As a planning tool, it can provide valuable insights that can help you make informed decisions about its future, whether you’re considering a sale or acquisition, securing financing, planning your estate, resolving partnership disputes, or dealing with taxes.

Questions? Contact Dave at

About Dave Bookbinder, ASA, CEIV: Dave is a corporate finance executive and serves as Haefele Flanagan’s Executive Director, Valuation Services. Known as a collaborative consultant, Dave has conducted valuations of the securities and intellectual property assets of public and private companies across all industries for various purposes. Working closely with business owners, CFOs, Controllers, and CEOs, Dave strives to build relationships that add value for the long term. Dave is also the host of Behind The Numbers, the show that digs deeper to understand what matters in business and the author of The New ROI Series. For future insights and articles, connect with Dave on LinkedIn, like him on Facebookfollow him on Twitter

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