The Payoff Partners Ron Newcomer and Bill Wynn owned the Xenia Coin Shop in Xenia, Ohio, selling coins, stamps and sports cards to collectors. But when Mr. Wynn died in February 1992, Mr. Newcomer and Mr. Wynn's widow wrestled over how much the company was worth. Mrs. Wynn received payment over seven years. But Messrs. Newcomer and Wynn never should have let it get to that stage. Ideally, partners should sit down once a year and establish a value for the company.
Any appraisal can help.
Alternatively, the partners can agree on a formula to evaluate the company, such as a multiple of earnings or revenue. Mr. Bridges, the accountant, suggests that a formula for valuing businesses owned by professionals like accountants, appraisers or engineers might be to take one year of revenue plus the value of some fixed assets. William H. Sipes Jr., a certified analyst in valuation from Jackson, Tenn., says that valuing businesses on their assets or income is common. You look at other businesses like yours and develop a ratio. Without a Plan Business that haven't planned ahead often can be headed for probate, experts say.