As a business owner, you realize that much of your net worth is tied up in your business—and as such, it is often difficult to place a value on it. Badgley Phelps clients have access to the Focus Business Owners & Valuation Solutions team to help them realize the value of their business so it can grow, stay competitive, fund other endeavors, and provide them with peace of mind.

This solution provides Badgley Phelps clients with access to a network of third-party providers who can help value a wide variety of business interests, financial assets, and other hard-to-value resources, including privately owned businesses, real estate, tangible assets, and life insurance policies.

“Many people assume their business will cover their expenses through retirement without taking the time to have the business valued,” says Badgley Phelps Financial Planner Megan Wiley. “Knowing the true value of your business is critical for well-crafted estate and retirement plans. It also helps you plan for the unexpected and is critical when doing succession planning or considering an eventual sale.”

Here are three common reasons you may benefit from a business valuation.

Estate and gift tax reporting

An accurate business valuation is critically important for estate planning purposes. For 2023, the IRS allows estate or lifetime gift tax exemptions up to an inflation-adjusted amount of $12,920,000 and it’s important to know how the value of your business impacts that number. Valuations may be necessary to file an estate tax return and calculate gift tax reporting.

Divorces or disputes

Knowing how much the business ownership is worth is critical when facing divorce. This allows the stakeholders to place a value on the business and to determine marital interest of each spouse.

Small business liquidity and exit planning

If it’s time to retire from your small business, a valuation can help you align the sale of your business with your retirement goals. Valuation can also help you determine whether you want to transition your business to a family member, or a key employee, or sell it on the open market.

Other reasons small businesses may benefit from a valuation engagement include:

• Gaining insights from experienced professionals such as attorneys, CPAs, and investment bankers
• Optimization of a company’s capital structure
• Fairness and solvency opinions
• Intellectual property valuations
• Shareholder buyouts

Are you a business owner interested in valuation? Contact us today.