It’s a myth that a business valuation is only useful when putting your medical transportation business for sale. In fact, the worth of your business should influence nearly every financial decision your company makes, from seeking financing to timing your retirement. Here are five common scenarios in which a current transportation business valuation comes in handy.
1. Business Sales
You probably already know that receiving a business valuation is necessary when putting your business up for sale. An independent appraisal supports your asking price, boosting buyer confidence – and possibly the return on your investment. However, it’s also a smart strategy if you’re planning to acquire a company or merge with an existing ambulance business. A professional appraisal can confirm a buyer isn’t overpaying for a business and can serve as a helpful tool during the negotiation process, whether you’re buying an established company or buying out a partner.
2. Finding Financing
Lenders financing a business – particularly a small-sized one – won’t approve a loan without some degree of due diligence. Usually this includes a professional business appraisal. It can be especially difficult to communicate ambulance business value to lenders, who may be used to dealing with retailers, restaurants, and other brick-and-mortar establishments. Including a current valuation in your pitch validates your potential and demonstrates to investors that you are an organized and efficient operation.
3. Legal Issues
From divorces to partner disputes, legal issues are an unfortunate but common reality of business ownership. A professional appraisal from an independent third party can put arguments about value to rest and illuminate options for moving forward. The worst time to put your ambulance company for sale is when you haven’t planned for a sale in advance. By receiving business valuations at regular intervals, you’ll be in the best position to maximize value – and your shot at receiving a fair price – if unforeseen legal complications do force you to put your ambulance business on the market.
4. Identifying Opportunities
If you don’t understand the value of your ambulance transport business, how can you make the right decisions to increase its worth? A current business valuation can be an entrepreneur’s most powerful planning tool. Let’s say you need a certain amount to retire. Based on value, you can determine what modifications or investments will be necessary to reach your goal. Perhaps you are considering taking your business to the next level. A transportation business valuation will help determine whether you should grow slowly by independently adding assets and customers or quickly by buying an established NEMT business for sale that comes with clients and equipment.
5. Succession Planning
Eventually every business must change hands, whether it’s transferred to an outside party or an owner’s son or daughter. A valid business valuation serves as the foundation of any good succession plan or buy-sell agreement. If an ambulance business has multiple owners, an appraisal is used to determine the price a partner or their family will receive upon exit from the business. As a company evolves over time, so does its value. Obtaining an updated valuation from an experienced transportation business broker ensures that, when a business does move from one owner to the next, both parties receive what’s fair.