Valuations: When You Can Retire?

If you own your own business, odds are that your business is your largest asset. Do you know what it is worth? Really know? If you have talked with your financial planner in the last few years, they are probably asking the same question so that they can get a true picture of when you will be able to retire.

If you haven’t done a formal valuation, you might be leaving significant money on the table. We suggest having an independent, certified professional perform the valuation for your company.

Many times, business owners are looking to hand the business off to family or employees. To get more specific, we had an owner that thought his business was worth $750,000. When we walked him through a true valuation with an independent firm, the value of his business was closer to $1,000,000. He was selling his business as part of his transition to retirement. Imagine the smile on his face as a result of having an extra $250,000 in his pocket that he wasn’t really expecting.

As we have talked about in previous posts, this is another reason that you have to keep clean books. The valuation process requires a review of three years of tax returns, cash flow analysis and other general questions. If that list made you nervous, you know you need to focus on this! Talk to your broker to get this figured out.