Business valuation can be a tool for growth

Some business owners may be looking to transition out of their companies, whether for financial reasons or to simply move on to another venture. According to Smart Business Online, a proactive business valuation years before a change in ownership can help improve the business before it is time to sell. "To maximize business value, owners need to develop a strategy to build institutional value," Barry Worth, member and director of mergers and acquisitions at Brown Smith Wallace, told the website. Worth's colleague, Bill Willbrand, explains that a business valuation should be about peeling away the layers to truly identify what components of the business drive its value. The valuation is almost like the training an athlete goes through before a big competition or the renovations a homeowner puts into his or her dwelling before putting a house on the market. Valuations help business owners get their ventures in tip-top shape before they are sold. "A business valuation forces you to really tease out value drivers and spoilers, and it gives you a baseline so you can develop a plan and begin to measure progress," says the website. SCORE, an organization that provides free online and face-to-face business counseling and mentorship, explains that a regular valuation of the business will not only help in a future ownership transition, but it is essential to estate planning to guarantee that the business and its profits will have life beyond that of their current owner.