Estate Planning:
Before a business owner of their financial
advisor(s) can determine the business owner's appropriate exit strategy,
the value of the business owner’s most valuable asset, their business,
must be determined. The business' value
can also play a key role in proper implementation of selected startegies.
If a reliable estimate of value is not determined in the initial stages of
the planning process it could produce
unintended consequences if the business has been under or over valued.
Some potential problems could be;
(1) the business is not worth an amount that would satisfy the owner’s
needs if the business were sold; (2) the business
does not have the
critical mass or debt service ability for an employee stock ownership plan
(ESOP); (3) the gifting strategy implemented
may erroneously assume that the stock going to the child active in the business is equal
to the owner’s other assets and that may not the case. These are to name
but a few of the ways that the owner’s expectations about an appropriate
succession strategy can be disrupted, perhaps after extensive costs have been incurred.
If a good estimate of value for the business can not be
determined then proper planning can not be accomplished.
Enterprise Value
Consulting's Valuation Calculation and Full Valuation
Report are both commonly used for
estate planning purposes. The Calculation is a timely and cost efficient valuation report
that will provide a
reliable estimate of value to begin the planning
process with limited cost and quick turnaround.
