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USES OF BUSINESS VALUATIONS
Business valuation is a very important aspect of buying or selling a business. The main uses of business valuations can be listed down as follows:
1. Provide a fair market value of a business as of a specific date in time
2. Annual "business check-up" for business owners to determine financial strengths and weaknesses
3. Benchmark comparison for business owners to determine how the business is operating compared to other similar businesses in the same industry (regionally and nationally)
4. Acquiring expansion capital through lending institutions and venture capitalists
5. Business Planning and Value Enhancement - Determining the present value of a business and setting goals over a period of time to increase that value
6. Valuing company stock for the development or annual review of an employee stock option program (or bonus stock option plan)
7. Retirement planning
8. Merger or acquisition (buying or selling a business
9. Planning for an initial public offering of stock
10. Conducting a major strategic planning initiative
11. Seeking outside investors
12. Disputing conclusions of an IRS audit
13. Conducting estate or gift planning that involves company stock
14. Creating a company stock-option plan or other benefit plans that involve company stock (such as ESOP or ESOT)
15. Breaking up a partnership (Partner buyout)
16. Getting a divorce
17. Entering bankruptcy
 

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