April 2026
Annual business valuations are, obviously, good for our business, but they are most likely good for your business as well. More often than not a business owner doesn’t think about having their business appraised until, for a variety of reasons, one is necessary, such as: a buy-in or buy-out, gifting of interests, estate tax reporting, or obtaining financing. Sometimes it’s necessary to have a business valued annually, such as: an Employee Stock Ownership Plan (“ESOP”), or a shareholder agreement that requires it.
Even when it’s not absolutely necessary to get a business valued annually, it may be beneficial to do so anyway. When you decide to get your business valued annually, the first valuation serves as a benchmark. Subsequent valuations provide valuable feedback as to changes in the value of the business. Changes in value can be addressed quickly. Without the annual valuations providing feedback, you are flying blind as to value. Some business owners might say that they know if the value of their business goes up or down by looking at changes in revenues and income, but these changes don’t reflect the market for businesses that would normally be considered in a business valuation.
Employee goals and annual compensation can be tied to the value of the business. This makes employees focus on how to increase the value of the business. Annual business valuations make estate planning and related gifting easier as it provides the estate planner the upfront value of the business and how the value changed over a period of time. In addition, annual valuations provide a price for transactions in interests in the business such as redemptions, buy-ins and between interest holders. Buy-sell and stockholder agreements often require annual valuations of the business so owners can track changes in value and know what their investment is worth at a particular date.
In summary, there are any many benefits that can be realized by having your business valued each year. Annual valuations can enhance focus on growing the value of the business, provide valuable information that can facilitate transactions in business interests and establish trends in the value of the business. In addition, annual business valuations after the initial valuation are normally significantly lower in cost, due to the fact that we don’t need to “reinvent the wheel” each year.
Relevant Court Cases
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Jeffers v. Jeffers,
Nebraska Court of Appeals,
34 Neb, Ct. App. 221,
filed April 14, 2026
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Kazemi v. Maron Electric Company,
Appellate Court of Illinois,
First Judicial District, No. 1-25-0908,
dated March 31, 2026
Recent Business Valuation Articles
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“Risk-Adjusted Payback Period Valuation:
A Practical Alternative To Traditional DCF Models,”
by Sangyul Baek,
revised April, 2026
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“Net Asset Value in Private Equity,”
by Gregory W. Brown and Maria Nykyforovych Borysoff,
posted March 26, 2026
Recent Engagements
- Valuation of 100% of the
common stock of an alcohol
products distributor on a
controlling interest basis for
marital dissolution purposes.
- Valuation of the class B
non-voting common stock
of a food service distributor
on a minority interest basis
for gift tax reporting
purposes.
- Consulting regarding
100% of the equity of
a niche medical facility on
a controlling interest basis
for planning purposes.
- Valuation of 100% of the
common stock of a lodging
operations company on a
controlling interest basis
for estate tax reporting
purposes.
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