Justine Zavitz

Justine Zavitz

  If you own your business, you are likely banking on the fact that it has value, the value is increasing, and someone will buy it from you in the future.  You might even be relying on this sale to fund all or part of your retirement. Even if selling isn’t on your radar, having a valuation of your business can be important for your future planning.

For anyone who has gone through a formal valuation, you know that it is a lengthy process that requires a lot of your time and money.  Once it’s done, you will likely avoid repeating the process unless it is absolutely necessary. Most valuations will give you exactly what you would expect – the value of your business, but have you ever stopped to think about how saleable your business is in the marketplace? A valuation means nothing if your business doesn’t appeal to a buyer when it comes time to sell!

Let’s look at Sue and Mary – equal shareholders in a company. We have always made educated guesses on what their business is worth based on the “rules of thumb” in their industry.  Our estimates led to advice surrounding the tax liability of a sale; when they can retire and what kind of income they might expect; and how to organize their wills and insurance to leave their desired legacies.  On top of that, the key person and buy /sell insurance amounts were reflective of this estimate.  Long story short, a lot of planning was taking place around this assumed value.

Recently, we were introduced to a company called Eksit (www.eksitoutlook.com), a software company that has taken the expensive, time-consuming process of a valuation and made it significantly easier and budget friendly.  The resulting report also includes a saleability score that demonstrates the appeal of the business in the marketplace, or, how easy it would be to sell.  When Sue and Mary went through this process, they discovered their business was worth much more than we had anticipated – causing us to re-examine all their planning, savings, shareholder agreement and insurances.  It also exposed the fact that the company lacked diversification of customers and that the customer relationships were tied to either Sue or Mary.  These factors resulted in a low saleability score, but at the same time, the report provided Sue and Mary with concrete suggestions on how to increase the business’s attractiveness to a potential purchaser.

Knowing the importance that the value of your business has on your financial, retirement and estate planning, taking the short time span required to have a valuation and saleability score done through the Eksit program, makes good business sense.  The resulting saleability score and recommendations to improve your business’s appeal to others helps you to set goals to increase its value. 

At Zavitz Insurance & Wealth we work with you, our valued clients, to assist with retirement, estate and financial planning, to maximize growth and build wealth at every stage of your career.   When we come across innovative companies like Eksit that can help with this planning, as well as increasing your net worth, we want you to know about them.  

 If you want to gain a better understanding of how your business valuation effects your retirement and estate planning, please don’t hesitate to contact us.