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Business Evaluations - When Are They Necessary

Sep 3, 2008
Having business evaluations done from time to time is just a part of doing business. The need for a business evaluation arises frequently, both on behalf of the business itself and from outside parties needing information regarding the business. Let's take a more in depth look at the practice.

What Are Business Evaluations?

A business evaluation can be sort of thought of as a very thorough and complete appraisal of the business's value, assets, accounts, and detailed economic situation. Not only do business evaluations account for the worth of the business, but they also usually reveal and take into account all retirement plans and pensions held within the business structure. Basically, a business evaluation is a precise picture of every asset and liability that a certain business can claim.

When Are Business Evaluations Necessary?

It's standard practice for business evaluations to be conducted in a variety of everyday situations. Here are just a few of the times when conducting a business evaluation is necessary:

Selling a Business - Perhaps one of the most common reasons for business evaluations, selling a business requires sharing and disclosing full knowledge of where a company stands in all areas. It's not unusual for both buyers and sellers to have their own evaluations of the business done in order to make sure everything is on the up and up.

Financing Businesses - Many business owners know how difficult it is to secure quality financing at attractive and affordable rates. An accurate business evaluation can help prove a business's worth and assets to the lender. Again, it's not uncommon for both parties to do their own appraisals first, especially in the case of major financing.

Divorce - For a variety of reasons, divorce happens all too often. Divorce is also a really common reason requiring business evaluations to be performed. Attorneys often need complete details of all assets and retirement accounts related held within one of the divorcee's businesses. Professional business evaluators know exactly what to expect and where to look for these types of assets.

Legal Cases - There are many legal cases when business evaluations are necessary as evidence to help remedy the situation. Although there are all kinds of legal scenarios that will require a business evaluation to be performed, a couple of the most common cases include wrongful termination cases and personal injury cases. When a business is involved in these situations, attorneys must know the financial and structural situation of the companies inside and out.

These are just a few of the reasons business evaluations are necessary. Again, the need for a business evaluation arises frequently, both on behalf of the business itself and from outside parties needing information regarding the business.
About the Author
Learn more about business appraisals and business evaluations to ensure you company is moving in the right direction or visit Buzband for more interesting topics.
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