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Business valuation methods must be wisely selected and accurately performed. To protect your business, valuation is best done in consultation with business valuation experts.
Every industry is different, and every business is different. A good business valuation consultant will help you determine a solid figure for your business, and he will tell you on what basis that number should be updated. Updating will be necessary, because business valuation figures will fluctuate with time and other factors.
As discussed elsewhere, business valuation will determine how much small business funding you require, to implement your buy-sell agreement and other phases of succession planning. For example, if you select life insurance as your source of funding, then business valuation will determine the amount of the policies.
Be sure to express your dreams and desires for your business to your business valuation consultant. This will help him determine how much life insurance you need and for how long—assuming that you agree that life insurance is your best option, to fund your buy-sell agreement.
Also, make sure that your business valuation consultant seeks the input of an independent life insurance broker that is free to find the best product for your unique needs, as opposed to a captive agent that will be limited to his own company's products.
Business valuation should not be put off. Although you can't know the future, you can insure against the known risks. That's the value of succession planning in a nutshell.
However, succession planning is a sophisticated and complicated arena, and requires the involvement of both a business planning attorney and a CPA or business valuation consultant. There are a multitude of legal, tax, and other planning issues.
Therefore, you must allow yourself plenty of time to carefully select qualified professionals that specialize in these areas—as opposed to general practitioners. You should not bring in an inexperienced advisor. There is too much at stake.
Again, we strongly recommend that you do not wait too long.
Steven H. Kobrin, LUTCF, is an independent life insurance broker and nationally recognized expert in field underwriting for people considered high risk. He currently serves as a preferred life insurance quote provider for professional advisors and their clients, including attorneys, accountants, financial planners, and business loan officers.
Consumers and consumer advocates are warmly invited to contact Steve for his experienced and patient guidance.
Online: Life Insurance Quote
Email: skobrin@stevenkobrin.com
Phone: 1-866-633-1818 (toll free)
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