There are many reasons why one may require the valuation of a business. This article will analyse some of these reasons, as well as provide you with some background information with regard to the actual business and home valuation process of South Africa.

Reasons for requiring the valuation of a business include:

  • The need for finance: before a money lender will grant you a loan, he or she will more than likely request a professional business valuation in order to determine whether or not granting the loan is a good idea.
  • A marital dispute: if you own a business with your spouse and the two of you decide to get a divorce, a business valuation will be made compulsory by the court. This valuation of a business will ensure that your business assets and monetary value is split evenly and fairly.
  • Tax purposes: when it comes to regular tax reporting, business valuation is encouraged.
  • Selling the business: if you plan on selling your business or company, you will obviously require a business valuation. This business valuation will make it possible for you to determine just how much you can sell your business for. Most buyers will not even consider buying your business if there has not been a professional valuation conducted during recent times.
  • Buying and selling shareholder agreements: according to, many buy/sell agreements require a business valuation so that ownership will be transferred at fair market value. Agreements between partners or shareholders (i.e. a buy-sell agreement) should be based upon a business appraisal rather than a simple formula. The formula approach may yield an unrealistic value, if there is a substantial change from the time of drafting to implementation. The valuation of a business enables cross benefit life insurance requirements to be more readily determined.

Now that we know some of the possible reasons for requiring a valuation of a business, let us now take a look at the question ‘what IS valuation analysis?’. A valuation analysis is all about analysing how much something is worth. It is a process that includes the slow and steady and recording of every asset within a home or business. A valuation can be performed on anything from property to assets and from plants to machinery. With regard to the valuation of a business, the process includes analysing the worth not only of the business itself, but also of the business’s valuable assets, such as machinery, stock etc.

Valuations of all kinds are performed by trained, experienced valuers. Many companies now offer professional valuations at reasonable prices, making it easy for you to keep up to date with the value of your home or company. When looking for a valuer, be sure to ask for information regarding previous projects that they have completed. This will give you an idea as to whether or not the valuer has experience with the item or type of business that you would like valued.