If succession is on your agenda, do you know what your business is worth?

By Natalie Wright, Leeds Office Managing Partner and UK Head of Family Business at Forvis Mazars

When business owners think about succession, the conversation usually starts with people. 

Who will take over? Should the next generation become involved? Who should own the shares, and how can the family be treated fairly? 

These are all important questions. But there is another question that needs to come much earlier in the conversation: what is the business actually worth? 

You might assume most business owners know the answer. They understand their customers, their markets and their financial performance. Yet valuation is often one of the least explored parts of succession planning.

Many owners have a figure in mind, often based on a conversation with a professional adviser, something they have heard about a competitor, or simply what they believe the business is worth after years of hard work building it. 

The reality is that value is rarely that straightforward. One of the biggest misconceptions is that there is a single value for a business. In practice, the answer often depends on the context. 

A strategic buyer may place a different value on a business than a financial investor. HMRC may view value differently from a potential purchaser. A minority shareholding may be worth less than a controlling shareholding, even if the underlying business remains exactly the same. 

Those differences really matter when ownership is being passed from one generation to the next. 

A founder may own 100% of the business and decide to gift shares to their children over time. On the surface, that can look like a straightforward transfer. In practice, questions quickly arise about what is being gifted, what those shares are worth and what rights come with them. 

A 20% shareholding is not necessarily worth 20% of the overall business. 

Control matters, and it has a value. The ability to influence decisions, appoint directors, determine dividend policy, or decide when the business is sold can materially affect what a shareholding is worth. It’s one reason why ownership and control should not be viewed as the same thing.

A family may decide to transfer value to the next generation while retaining control for a period of time. Another family may take a completely different approach. There is no single right answer, but everyone involved needs to understand the implications. 

The conversation becomes even more important when fairness enters the equation. Many business owners want to treat family members equally. The challenge is that equal and fair are not always the same thing. In my experience, this is often where some of the most difficult family conversations begin.

One child may work in the business while another does not. One may be central to future leadership while another has no interest in ownership. Understanding the value of the business, and the value of the individual interests within it, helps families base those discussions on facts rather than assumptions. 

Valuation has also become increasingly important in inheritance tax and Business Relief planning. The changes introduced from April 2026 have prompted many owners to look again at their position, sometimes for the first time in years. 

Before a family can make informed decisions about gifts, trusts or future ownership structures, they need a realistic understanding of what the business is worth, what tax might arise and where the money to pay that tax would come from. 

A plan that puts pressure on the family to extract cash, increase borrowing or sell part of the business at the wrong time could undermine the very business they are trying to protect, and potentially damage its long-term value. 

Tax should not drive every decision, but it needs to be understood before decisions are made. 

Valuation can also highlight risks that need to be addressed before succession takes place. How much of the business’s value depends on the founder, a small number of customers or key members of the management team? 

Reducing those dependencies can strengthen the business, protect its value and make an eventual transition more manageable. 

What I often find is that a valuation can change the nature of the conversation. Families can make better-informed decisions about ownership, leadership, future wealth and what they want the business to provide for different generations. 

Succession planning is ultimately a conversation about people, value, ownership and control. Getting those elements aligned gives a family a much stronger foundation for protecting the business and planning for what comes next. 

For many owners, succession feels like a future problem. In reality, some of the most valuable planning starts long before any transfer takes place. Understanding what the business is worth is often the first step.

To find out more, visit Business Relief and succession planning.