Do You Know What Your Business is Worth?

Posted on June 20, 2012 · Posted in Blog

According to a 2009 Small Business Administration census, there are 27 million small business owners.   Warren Buffet thinks only a small fraction of these actually know what their business is worth. Worse, he believes that most small business owners have some 90% of their net worth tied up in the business.

Speaking to investors at Berkshire Hathaway’s annual meeting this year, he said “If business schools could offer just one course, it would not be on stock trading, the efficient market hypothesis or modern portfolio theory. Rather, B-schools should be encouraging students to learn the boring, but critically important, discipline of business valuation.”

Not understanding business valuation can be a dangerous bit of ignorance on the part of business owners. Reason: Ceteris Paribas, the federal estate tax exemption will fall from $5 million to $1 million at the end of this year. That means if you own a business worth $4 million, upon death, $3 million is subject to federal estate tax as high as 55% or $1.65 million.

Your choices:

Litigate with the feds over the value of your business.

Wipe out your liquid net worth to pay estate taxes owed on the business.

Sell the business to pay the estate taxes.

Have you ever wondered what the value of your business is? The Danto Group can provide a comprehensive, accredited business valuation at a very reasonable cost to help you understand the value of your business and help develop a strategic plan.

Source:   The Street.com

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