11 Jan What is Your Business Worth?
When it comes to selling a business, it’s immediately obvious that you need to know how much your business is worth before bringing it to the market with the help of a professional business broker. This is not a task that a business owner should conduct by his or herself, as it takes a lot of time to gather all of the necessary financial information regarding your business, and this is difficult to do while simultaneously monitoring the day-to-day operations of your business. With your professional business broker’s aid, determining your company’s worth will be a much easier task. But what factors ultimately determine the worth of your business? In today’s post, we will cover the different variables that are essential to examine before selling in order to render your company’s true value.
There are certain areas of your business of which you and your broker need to be keenly aware if you are going to properly valuate it. These include tangible and intangible assets, liabilities, and financial metrics. Tangible assets include machinery, property, and inventory, while intangible assets include things like brand recognition, trademarks, and patents. Liabilities are the debts that are owed by your business, and financial metrics include your annual and overall profitability and revenue. All of these factors must be calculated in order to determine the value of your business before you bring it to market. Once you have completed your financial analysis of your business, you and your business broker can place a price tag on your company and begin the search for potential buyers.
However, it should be noted that valuating all of your company’s assets will not ultimately render the final selling price of your business. When you find a potential buyer that is competent, experienced, and willing to maintain the legacy that you have built for your company, you will enter into the negotiation phase of the sale, and most likely your buyer will compare the price of your business to similar businesses on the market and will wish to haggle for a lower price in comparison to what is currently available on the market. It is crucial in this step of the process that you as the seller not be unreasonable or unnecessarily argumentative, as poor attitude and communication can immediately end a sale that would have otherwise been a fruitful transaction. You must follow your business broker’s lead and negotiate in a rational manner in order to render a price that will provide the appropriate profit for you as the owner.
If you’re ready to sell your business, these steps are necessary, as is finding a professional business broker with years of experience to help execute your sale. A great way to begin this process will be to contact Moche Hazout at Transworld Business Advisors today!