Is there a Catch to your Firm’s Value?
Recently, a colleague relayed a conversation with one of her professional colleagues. His question was: Does my firm even have a value?
This is a question that deserves an answer with precision. If you look at the photo we chose for today’s Blog, you will see precision in Lâffey’s determination to catch the falling ball. If he doesn’t catch it, he will be disappointed. If he times it just right, he will catch it and bring it back for the next throw with a wagging tail. Even our canine companions know the difference between a catch and a miss. Feeling triumphant far outweighs disappointment, for them and us.
For many professional firms or micro businesses, understanding the value of their firm is not a simple task. Even wondering if your firm has value, carries with it that anxiety of the unknown, will I get this or won’t I?
The good news is that there are professionals to help answer the question of valuing your business. They are called Certified Valuation Analysts or CVAs. If you are looking to sell, merge, or expand,, reaching out to a CVA is a must. You need to know your value and your firm’s value before you are in the right position to execute a contract on the price of your work.
CVAs can be found through your accounting circle of trust advisor or by a simple internet search specific to the location of your business. They can also be found in general finance related companies as well. Be prepared to share your financial statements with them and the contract you may be reviewing.
The other time a CVA may be critical to your firm’s worth is in the event of a divorce, whether personal or business. If you own your own business and you part ways with a spouse or a business partner, they may be looking for future compensation from your company. Business partnership break-ups can sometimes be as challenging to work through as personal divorces. It can become particularly sticky if your business breakup includes a family member. Attempting to navigate this alone can be a bad decision. Reaching out to a CVA and allowing them to provide a third party analysis can be that space that is needed to resolve the question of value.
Understand that your partner or spouse may also want to have their own analysis completed. Usually there will be some element of mediation in this scenario where both sides have to relinquish a bit to reach a point of resolution. This may not be easy but having third parties that are licensed in business valuations will allow you to understand the worth of your business. And once you have retrieved that figure, you can move forward with confidence.
Grab control of the value of your business and you will have the information and confidence to negotiate your sale, merger, expansion, or breakup. Seek out a CVA professional and give yourself peace of mind.
Be well.
