Business Owners Choose a Transfer Value

Slee, Robert T.
June 2004
Journal of Financial Planning;Jun2004, Vol. 17 Issue 6, p86
Academic Journal
Depending on their transfer motives, private business owners actually choose the range of values within which their business will transfer. A wide variety of transfer motives leads to a correspondingly large range of possible values for a business. Transfer motives range from needing a change in lifestyle to using the transfer as a wealth-creating vehicle. Business transfer alternatives are numerous and comprise a spectrum of channels, or macro options and methods, or specific techniques used to effect a transfer. For example, an ESOP (method) may be used to transfer part of a business within the employee channel. A private business value is relative to the reason for the appraisal; that is, every private company has a large number of correct values at a given time, depending on the reason or purpose of the appraisal. Purposes of an appraisal can be described as value worlds. Each value world employs a specific process by which to derive value. The choice of transfer method selects a value world, which leads to a specific value. Understanding the linkage between transfer motives and business values empowers planners to help clients develop and execute their financial plans. INSET: Executive Summary.


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