Family business value
We provide business valuations to a number of privately owned family run businesses. All of these families have one thing in common… their belief that the business has infinite value and it is owed to them.
The value within family owned business is sometimes referred to as value to the owner, special value, or value in use. The business has value within the family due to:
- Sentimental reasons. The family, mum or dad, started the business and are very proud that is has survived. It must be worth something because we have worked hard and are passionate about it.
- Lifestyle reasons. The income and others benefits generated can be substantial in private businesses, providing a lifestyle that could not be matched with being an employee or investor.
- Tax management reasons. Our tax regime allows the use of family trusts, self-managed super funds and other wonderful structures to spread the wealth, manage the family’s overall tax position or reduce the burden of pesky payroll taxes.
- Liquidity patience. The long term nature of a family business means that no family members are looking for a quick buck from selling the business and have rarely addressed the question of marketability.
The family is critical to the ongoing success of the business due to the depth of expertise and/or relationships with customers and suppliers. The business is only valuable to the extent this risk can be reduced.
The “family value” of the business is a magnificent illusion.
Smart owners involved in family businesses know that there is a clear difference between value with and without the family.
