Because of the Tax Cut and Job Acts of 2017, the marginal rates are lower. The impact of the recent tax cut is very straight forward. Lowering the rate, means a higher after-tax cash flow which translates into higher value for businesses.
Business owners know their business better than anyone. That being said, you would also assume they would know the value of the businesses? Not so fast!
Knowing your business and knowing what you think it is worth in reality can be two separate issues. If it were that simple, appraisers would not be needed, but they are, and they play very key role. They arrive at a fair market value after taking many facts into consideration.
Valuations; “The Walk Way Number”
The “country club” concept of a business owner having a number in his/her head as to what they would take, if offered, offers some interesting conversations during happy hour!
Over the years I have spoken to business owners, and periodically I have been told that the owner has a figure in their head, and if they were offered that figure for their business, they would take it! They seem to know their business better than anyone, so it is reasonable to believe they have a handle on the value of their company. In more cases than not, that figure would allow the owner to go and do what they want in life as it would give them the capital needed, and the can walk away from the business.
However, there are some different sides to this concept! A more logical way of knowing the business value!