M—Business Valuation

There are many reasons why the owner of a closely held business must have some idea of the value of his business:

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• When obtaining loans a higher, yet realistic, value could result in increased credit.
• If the reasonableness of compensation to an employee-stockholder is challenged by the IRS, knowing the value of the business will be helpful.
• In determining a price for the business when it is sold upon death, disability, or retirement.
• For estate planning purposes, the higher the value, the greater the potential estate tax.
• For estate planning and business continuation purposes, it is important to know the value when selling or gifting interests.