Value determinations are most commonly needed to calculate estate tax upon death, split up family assets in a divorce, and negotiate value in a purchase, sale or merger of a business enterprise. Other common reasons why a holder of an interest in a privately held company might require a business valuation include: Adequacy of Life Insurance Buy/Sell Agreements Bankruptcy and Foreclosures Charitable Contributions Disruption of a Business Dissenting Shareholder Actions Dissolutions Divorces Eminent Domain Franchise Valuation or Evaluation Gifting Programs Gift Taxes Incentive Stock Option Programs Liquidation or Reorganization Obtaining Financing Partner Disputes Split-ups/Spin-offs Succession Planning One of the best reasons for obtaining a business valuation is to use it as a management tool. A prime objective for all business enterprises is to improve and maximize its value to the owners. A properly prepared business valuation provides management with insightful information that helps identify company strengths and weaknesses that affect value, allowing them to more effectively focus their energies in places that really count.
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