There are many reasons and situations that require a professional valuation of your company.
Where litigation is involved, the reason is obvious. It would include situations where a dispute between parties has escalated into a courtroom battle. Under certain corporate circumstances, a minority shareholder has the right to be bought out. In order to fix the buy-out price, the company value must be determined.
In divorce actions. closely held businesses owned by a famioly member are part of the marital estate and subject to equitable distribution. So, naturally the family business must be valued before an amount can be assigned for distribution to each spouse.
Litigation frequently develops when the Internal Revenue Service challenges the value of a privately owned business that had been included in an estate. The same situation can occur when estate planning involves the gifting of a business.
Similarly, when a company establishes and maintains a stock option plan for employees, the value assigned to company shares held by the Plan must be valued. Important taxation issues hinge on valuations of this type.
Buy/Sell ageements contained in shareholder contracts require values at which the departing shareholder/partner will be liquidated.
Finally, in contemplation of a purchase or sale of a privately held company, the fair market or investment value is obviously important.