The business world is never without risk. The mere decision to put up a business is already a risk. Staying is a risk and quitting, again, is a risk. An entrepreneur should always be on top of things, clawing and picking at the many tidbits of the whole business scene.
That being said, one should also be aware that a business is an entity that is bound by legalities. And in the history of a business, certain circumstances happen that’s beyond one’s control. Before you know it, you’re facing a lawsuit and are required to pay the damages. It’s a tedious process, and the conclusion could amount to you losing everything you have. Including the business itself.
Before everything else goes down the drain, there’s business valuation.
Part of the trial process is knowing the history of both sides – the companies’ financial records, personnel and concerns that could affect the impending lawsuit. This particular stage is called discovery. At this point also, the judge who is hearing the case can order a business valuation. It may also be done by the other party.
The other side can request various financial information like balance sheet, and cash flow and income statements. They can also ask for other data such as income tax returns of the business, inventory records and accounts payable and receivable, among other things. Given, though, these documents only reflect the business’ financial status and not its value. A lot of other factors are still to be considered to be able to determine a business’ value.
Proving a business value in court could be hard but it can be done and the best way to do it is to have your business appraised by a certified business valuation specialist. Appraisal reports done by these professionals will hold up in court as evidence.
With business valuation, you can actually protect your company against discernment that is way too high as compared from the value of your company. If you ever find yourself needing help for litigation, don’t hesitate to talk to us. After all, it’s in our best intentions to assist you with our expertise.
