Chapter 13
Case Study: Valuation on the Sell Side
In This Chapter
Anticipating common valuation problems and preparing your family
Establishing a prevaluation plan
Doing the actual valuation
Most valuation professionals get a call when a triggering event occurs in a business ownerâs life or the life of his or her family. Maybe the owner just died. Maybe the owner is just burned out or suddenly realizes for a host of reasons that itâs time to retire. Maybe family members are squabbling about taking over the business. Maybe the owner is terminally ill. The designated family member calls with a familiar panic in her voice. âWe donât know if anyone wants to keep running the business,â she says, âand we canât afford to keep it open.â And then comes the all-important question: âHow much do you think weâll get?â
At this point, the best valuation professionals often have to deliver the worst news: that without a plan made while the owner was alive, family members may not see much benefit at all from selling the business. Worse, they may actually lose money preparing the business for sale or closure.
The decision to sell without analyzing the tax consequences, advantages, or disadvantages of potential deal structures or how a sale would fit your personal and financial goals can be catastrophic to you, your company, and your family. This âsign today, sell tomorrowâ mentality is common, and most experienced valuation professionals see it as a decision-making process ...
