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What are buyouts and dissolutions? And why would you need a business appraisal in these situations?

Now most business owners prefer smooth sailing to abrupt shifts in direction of their companies. Once in a while, though, you may face the need to address challenges that call for a change in ownership structure.

When this happens, the owners need to find out the value of their business. What are the top reasons for this? Buyouts and company dissolutions.

Buyouts

In a buyout one or more business owners decide to let go of their share of the company. Unsurprisingly, most departing owners want to be paid a handsome sum before they walk away. If you do not like the offer, you would be unlikely to give up your ownership rights.

Sometimes buyouts turn sour. The owners that remain may not want to offer an attractive amount and terms. If the departing owners take exception to this, they often refer to the situation as a squeeze-out.

In other words, some owners seek to push out the others, sometimes taking legal steps or applying other pressure tactics to encourage other owners to leave. Needless to say, a binding business appraisal may be called for.

Dissolutions

You may want to dissolve a company in some situations. For example, many privately owned businesses are dissolved upon an acquisition. An asset purchase usually leads to the seller winding up and dissolving the sold business. The buyer gets the business assets based on their appraised values. So again, you would need a business valuation to figure out the terms of such a transaction.

Note that in both buyouts and dissolutions several parties are involved. So you should look for an objective and professionally done business appraisal to reach an acceptable compromise.

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