The Importance of Business Valuations for Your Business

The importance of business valuation can never be underestimated by an entrepreneur regardless of its volume or type of business. Knowing and understanding what the worth of your business is not only imperative from a tax perspective, business funding or in decision making but determining its fair market value is vital when it comes to selling, merger, acquisition or for its reformation. Let’s have a look to estimate why and business valuation in Dubai is so important.

In Reorganization

The purpose of reorganization is to revitalize the financial stability of a company with a view to extending its life, facing a bankruptcy. It involves the interpretation of its assets and liabilities while continuing the discussion with creditors to undertake needed arrangement and settling their debts. As implies, reorganization of a company may lead to a change of company’s ownership, change management, acquisition, recapitalization, or merger whereas necessity of business valuation in Dubai is most essential for a constructive reformation.

Under Merger and acquisition

M & A has been one of the critical but easiest business growth strategies for global class companies in the present century. With an effective business takeover (acquisition) an enterprise can attain greater market presence, increase its product lineups with brands, and improve business portfolio aside from profitability and overall performance metrics. Nonetheless, negative outcomes of M&A is not uncommon, which is why, regardless of, you’re a buying or selling company, with an expert business valuation in Dubai of the target company you can get through a productive negotiation, assume or refuse the offer. To have a win-win Merger and Acquisition, business valuation is critical.

To Settle Legal Disputes

Corporate disputes like objections from shareholders, the discrepancy in Joint Venture, breach of contract with financial institutes and investors are most common episodes found in the modern business world. Almost all such cases move into tribunal whereas advocates or the court often require investigating the value of the business including assets, liabilities, reserve, stocks, etc for settlement of the dispute.

Transfer of Shares

If you’re intended to transfer your business ownership to an heir, associate or adopted son, having a professional business valuation in Dubai is essential for you to determine the fair value of the business mainly for its current and future tax implications. Equally, dissolution of a partnership business, the death of shareholding board member or retiring of partner are among the common events whereas determining the value of a business is vital.

Attract Investors

Whether you’re a start-up business entrepreneur or high profile corporate group, obtaining fund through public or private banks, financial institutes or investors has been a trend to initiate a new project, execute a high volume order, investing in research and development, etc. however, prior to providing you with a business loan, the financial institution or investing company will require a complete set of your financial statements to ensure your business status, risk factors, if any, whereas having regular business valuation  is essential.

In Decision Making

Critically, with the efficient business valuation in Dubai businessmen can attain a better as well as risk-free position to undertake vital decision-making ideally beneficial for their business. Aside from having all facts and figures in hand, expert assessments help in effective identification and elimination of major lacking areas in a business, saving it from a major collapse. For example, while deciding on dividend policies, investing in a new venture, comtemplating capital restructure or business takeover, having a concrete idea of your business value is a fundamental need.

Knowing Tax Liabilities

In order to avoid the scariest IRS audit and penalty always consider keeping your business prepared with accurate, justifiable, and professionally-documented financial statement, Aside from knowing your tax liabilities and meeting them as per the regulations, with accurate business appraisal, tax lawyers can help lessen your tax liabilities which can be used in paying dividend, keeping business reserve or invest in a lawful way. Knowing the fire value of your business also helps keep aside needed fund to meet your estate tax liability.

Assessing intellectual property

Your business IP (intellectual property) like Patent, Copyright, Trademark, and Goodwill are the most valuable intangible assets of your company. Having time to time business valuation is vital to determine the worth of your Goodwill or other IPs. Unsurprisingly, these intangible assets are most powerful to attract major investors and shareholders.

MIS/Financial Statements

To name a few among the most vital financial statements and reports that a business enterprise irrespective of its size needs to maintain include P&L account, Balance Sheet, Cash Flow statements, Statements on Stockholder’s Equity, Bank Reconciliation, etc. There are having immense value in planning, decision-making; decide profitability, MIS, as well as in fair business valuation.

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