Decisions regarding future business goals such as expansion and spin-offs can be made more easily with the help of strategic forecasting. Family wealth is often shared through such means as business transfers, inheritance, family limited partnerships, and gifts of closely held stock. Valuation can help minimize tax liability and reduce the possibility of an IRS audit or a legal dispute. Valuation is often needed when divorces involve family-run businesses. An early valuation may increase the possibility of a quick settlement, minimizing litigation and preserving assets.
Valuation is a useful tool in developing a business plan.
It can demonstrate the value of a business opportunity to investors, or can aid management in confidently focusing on realistic business goals. The primary question when facing bankruptcy is whether the company is worth more as a going concern or in liquidation. Also, analyzing the company in several operating scenarios can assist in selecting the best reorganization or liquidation plan. One of the greatest challenges that a closely-held company may face is the exit of one of its owners through death, disability, or voluntary transfer. Conflicts can be minimized by establishing the company's market value before need arises.