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A Guide to Business Valuation Services for Strategic Planning

  • 2 days ago
  • 3 min read

Understanding Business Valuation in a Strategic Context


Business valuation services are used to estimate the economic value of a privately held company. Unlike publicly traded businesses, private companies do not have readily observable market prices, which makes valuation a more analytical and judgment-driven process.


For many owners, valuation is not solely about preparing for a sale. It is often used as a planning tool to support strategic decisions related to growth, succession, ownership structure, and long-term financial organization.


A financial advisor helps a client review documents and a laptop, discussing business valuation.


Why Business Valuation Matters


A well-supported valuation can provide clarity across a range of planning scenarios.


Common uses of business valuation services include:


  • Strategic planning and growth assessment

  • Succession or ownership transition planning

  • Estate and gift planning

  • Buy-sell agreement structuring

  • Shareholder or partner discussions


Understanding business value helps owners evaluate options with greater perspective and consistency.


Types of Business Valuation Services


Full Valuation Reports


A full valuation typically involves an in-depth analysis of financial statements, operations, industry conditions, and market data. These reports are often used for formal planning purposes, such as tax reporting, litigation support, or significant ownership transfers.


Calculation of Value


A calculation of value is a more limited analysis that uses agreed-upon methods and assumptions. While narrower in scope, this approach may be suitable for internal planning discussions or preliminary evaluations.


Valuation Updates


Some businesses obtain periodic valuation updates to reflect changes in performance, market conditions, or ownership structure. Regular updates may help keep planning assumptions current as circumstances evolve.


Common Business Valuation Approaches


Income Approach


The income approach estimates value based on a company’s ability to generate future economic benefits. This method often uses discounted cash flow (DCF) analysis, which converts projected cash flows into present value using a discount rate that reflects business risk.


Three business valuation methods: Asset-Based, Market Comparable, and Income-Based approaches, shown sequentially.


Market Approach


The market approach compares the subject business to similar companies that have been sold or valued recently. Valuation multiples from comparable transactions or guideline companies are applied to relevant financial metrics.


Asset-Based Approach


The asset-based approach focuses on the net value of a company’s assets minus liabilities. This method is more commonly used for asset-intensive businesses, holding companies, or situations involving liquidation analysis.


Key Factors Reviewed in Valuation


Business valuation services typically evaluate both quantitative and qualitative factors.


Common areas of review include:


  • Historical and projected financial performance

  • Cash flow consistency

  • Industry trends and competitive environment

  • Customer and revenue concentration

  • Management depth and operational structure

  • Ownership and governance considerations


These factors help frame risk, sustainability, and long-term viability.


Valuation Discounts and Adjustments


Private company valuations may include adjustments based on ownership characteristics.


Common adjustments may include:


  • Discounts for lack of marketability

  • Discounts for minority ownership interests


The appropriateness of these adjustments depends on the valuation purpose, ownership structure, and applicable standards.


The Role of Independent Valuation Professionals


For certain planning objectives—such as estate and gift tax reporting—independent valuation professionals may be required. Independent reports help support assumptions, methodologies, and documentation standards.


Professional valuation services may also provide objectivity during internal planning or ownership discussions.


Integrating Valuation Into Strategic Planning


Business valuation is most effective when incorporated into broader planning conversations, including:


  • Business succession and continuity planning

  • Personal financial and retirement planning

  • Estate and legacy planning

  • Risk management and liquidity planning


Valuation insights may inform timing decisions and help align business strategy with personal financial goals.


When to Consider a Business Valuation


Business owners often consider valuation services following events such as:


  • Significant changes in revenue or profitability

  • Ownership transitions or new partners

  • Planning for succession or retirement

  • Changes in tax or regulatory environment


Periodic valuation review may help maintain alignment as circumstances change.


Conclusion


Business valuation services provide structured insight into the value of a privately held company and support informed strategic planning. By understanding valuation approaches, influencing factors, and service types, business owners can better integrate valuation into long-term decision-making.


Because valuation outcomes depend on assumptions, methodology, and context, professional guidance is an important part of the process.



Investment advice offered through Stratos Wealth Partners, Ltd., a registered investment advisor. Stratos Wealth Partners, Ltd. and Parkview Partners Capital Management are separate entities. Neither Stratos nor Parkview Partners Capital Management provides legal or tax advice. Please consult legal or tax professionals for specific information regarding your individual situation. Please consult with your professional advisors before taking any action. Past performance is not a guarantee of future results.


 
 
 

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Financial Advisor, Investment Advisor, High Net Worth, Wealth Management, Tax Planning, Risk Management, Financial Coordination, Retirement Planning, Charitable Giving, Columbus Ohio, Parkview Partners Capital Management

291 East Livingston Ave.
Columbus, OH 43215


Phone: (614) 427-2132

Fax: (614) 427-2132

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