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A first step in the business succession process

Obtaining an estimate of the value of your business is often a good first step in your business succession planning process. Whether you want to sell your business after your death to your business partner and are purchasing life insurance for it, or if you would like to transfer your business to your child who is active in it, it often makes sense to have an idea what your business is worth. Your CPA should be able to help you with a formal business valuation and may refer you to a professional business appraiser – that is their role in the business valuation process.

To help you understand part of the business valuation process, you could begin by applying just one business valuation method to get a very preliminary idea. There are many different business valuation methods used to obtain a business value. Business valuation methods are based on many different factors including business assets and debt, historical earnings, future earnings, current market for similar businesses, risk of the business type, or a combination of those or other items.

The following analysis uses a discounted cash flow and earnings method to calculate an informal estimate. The analysis uses just that one formula (again, there are many) and is based on the discounted potential future cash flows of your business with consideration for excess compensation paid to the owners, level of risk, and possible adjustments for small size or lack of marketability.

The results shown are based on the information you provided and are not a guarantee of future values or investment results. Please talk to your CPA or professional business appraiser for a more thorough and complete formal business valuation using all business valuation methods appropriate for you. Talk to your financial professional about how life insurance may fit in your business succession strategies.


This material is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal, financial, or tax advice and cannot be used to avoid tax penalties or to promote market or recommend any tax plan or arrangement. Please note that the Allianz companies, their affiliates, representatives or employees do not give tax or legal advice. You are encouraged to consult your CPA or professional appraiser for a formal and complete business valuation. The results represented in this tool are provided by CalcXML and are deemed reliable but are not guaranteed.

· Not FDIC insured · May lose value · No bank or credit union guarantee · Not a deposit
· Not insured by any federal government agency or NCUA/NCUSIF

Life insurance requires health and financial underwriting. For information on how life insurance works, including fees and expenses, please contact your financial professional. Products are issued by Allianz Life Insurance Company of North America, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297. Allianz Life Insurance Company of North America and CalcXML, are not affiliated companies.