Business appraisals or valuations can furnish vital planning information and help mitigate risk. Indeed, business valuations furnish documentation to support new financing, providing the evidence lenders need. An independent evaluation may encourage lenders to offer favorable rates. But wait — the IRS has undervalued or overvalued your business.
Business valuations are used for many reasons. Some are fully business related, such as applying for a bank loan to expand your business, whereas others are more personal, for example, getting divorced.
Your business is humming along. You have no plans to sell or to go public. You're planning to keep your business going and growing for the foreseeable future. Your advisor suggests you have a baseline valuation done on your business, but you don't understand why that's necessary.
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