How much is your business worth and what are your succession plans? These are questions every business owner will face at some point. Planning for your exit is often one of the hardest things a business owner must do. Contemplating selling the business you built or help to develop is complex, difficult, and emotionally challenging. When succession planning is executed properly, it allows for the orderly transition while protecting the exiting owner professionally, emotionally and financially.

WHAT SHOULD BUSINESS OWNERS DO TO PREPARE FOR BUSINESS SUCCESSION AND HOW CAN THEY MAXIMIZE THE VALUE OF THEIR BUSINESS?

• The first step is determining a realistic value of the business. This is accomplished by having a valuation performed. Some owners may want to determine the annual value of the business for legal reasons, such as a buy/sell agreement, and others may want to be updated on an as-desired basis in order to keep track of the value of their estate.
• The simplest and least expensive way to determine a value of the business is to engage one of our CVA experts to perform a Calculation of Value engagement. This calculates the value using the same general methodology of a more comprehensive Opinion of Value engagement, without the increased reporting requirements.
• Another benefit of the Calculation of Value engagement is the professional’s assessment of the main drivers of value for the business. This may help the owner determine ways to increase the value of the business before they decide to transfer the ownership. Determining the value of your business and incorporating this information into your overall financial, retirement, and estate planning, will help you manage the wealth of your business. To help business owners through this process CDS offers business valuation and succession planning services including setting up a model to easily understand different structuring scenarios to help businesses execute a successful transition strategy.

A CASE STUDY: USING MODELING TO TRANSFER BUSINESS TO A STRATEGIC BUYER

CDS recently helped a business owner who was interested in transitioning the business to a strategic buyer. Another firm had completed an earlier valuation. Our valuation and succession experts analyzed the situation. It was determined that the owner needed help structuring the transition to make it fair and beneficial for both parties and helped determine a fair acquisition price. They set up a model allowing the client to easily understand the different structuring scenarios, along with the impact on both the buyer and the seller.

CDS works with companies, in multiple industries, to uncover the true value of each company’s tangible and intangible assets. Whether you need help creating a succession plan, conducting a business valuation, or structuring the transaction, our experts can guide you.

Need help with your succession plan? Give one of our experts a call at (888) 388-1040.