Most everyone receives a brokerage statement detailing the value of his/her publicly-traded stock and bond portfolio and the related gains and losses for the period. Unfortunately, a private business owner usually does not receive continuous updates on the market value and rate of return of his/her privately-held business. For a private business owner, the business typically comprises the majority of his/her family wealth and is often significantly greater in value than his/her brokerage account. This raises the question – do you know the value of your privately-held business and the annual rate of return you are earning? The following ten questions highlight important considerations for all private business owners and their advisors, and we encourage you to give careful thought to them.

  1. How much is your business worth? How do you know?
  2. What is the annual rate of return on your business? How does it compare to the public markets?
  3. Is the rate of return a fair rate of return given the risk profile of the business?
  4. How would an investor view your business?
  5. How much of your personal wealth is tied into your business?
  6. Have you considered extracting and diversifying the “illiquid” wealth in your business (without selling an equity stake)? For example – by implementing enforced dividend policy or making leveraged dividends.
  7. Illiquid wealth does not always equal liquid wealth. What steps are you taking to ensure they are the same?
  8. Do you know whether your business value can be transferred?
  9. What is your long-term exit plan? For example – sale, family succession, buy-sell agreement, ESOP.
  10. Is your business in the best possible shape to sell right now? If not, what do you need to do and how long will it take to get there?

Dean Dorton’s business valuation group and wealth and estate planning team members have assisted many private business owners with these questions. For more information, contact David Angelucci at 859.425.7695 or or Leigh McKee at 859.425.7617 or

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