Episode 25: Business Valuation: What it is and why is it important for your family business to have one in your business transition plans?

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Your host, Greg Lewis, talks to Travis Harms, Sr. Vice President at Mercer Capital located in Memphis, Tennessee about the importance of a business valuation in helping you and your family have a realistic understanding of the value of your business and/or the value of your shares. This is critical for business and personal decision-making and planning for you and your family business. 

There are a number of reasons family business owners need a valuation done. These include: 

  • begin a sale process, 

  • resolve shareholder disputes, 

  • business planning & future decision-making, 

  • determine your tax obligations, 

  • litigation purposes(including divorce) 

  • ability to access external sources of funding 

 

On today’s podcast you will learn: 

  • How the value of your business is calculated 

  • Establishing a value is important whether you transfer to the next generation or to a third party 

  • A valuation is great for transition planning and a positive communication tool for all family business shareholders 

  • There are three different valuation methods for your business (asset approach; income approach; market approach 

  • How  a business valuation is used in a buy-sell agreement 

  • Why a business valuation is important in the case of the sudden death of a business owner or other shareholder 

  • What a business valuation cost 

  • And much, much more!! 

Our guest today has been Travis Harms. Travis  is Sr. Vice President at Mercer Capital located in Memphis, Tennessee where he leads Mercer Capital’s Family Business Advisory Services Group. Travis’s practice focuses on providing financial education, valuation, and other strategic financial consulting to multi-generation family businesses.  

Travis is the author of the book, the 12 Questions That Keep Family Business Directors Awake at Night and co-author of Business Valuation: An Integrated Theory, Second Edition, with Z. Christopher Mercer. To learn more about Mercer Capital visit their website at www.mercercapital.com 

To learn more about the Tennessee Center for Family Business, visit our website at www.tncfb.com.