VALUATION
STEP ONE - CONTACT A BUSINESS BROKER
A good business broker can help you figure out what a reasonable starting asking price for your business will be.
STEP TWO - GATHER YOUR FINANCIAL INFORMATION
Potential investors wants to see clear, clean books that gives them confidence the company is strong
When you’re trying to sell your business quickly and efficiently, transparency is key. Potential investors want to see clear, clean books that give them confidence the company is strong and that there are no soft spots that they are going to discover later after the deal is done. You can build trust and project transparency by having at your disposal and ready to present to potential buyers things like:
- Federal income tax returns (at least three years’ worth)
- Year to Date Profit and loss statement plus three years’ historical information
- Lists of inventory, equipment, and other hard assets
If you don’t have one in-house, a qualified professional accountant can look through your books and identify any red flags before you sell your business. Luckily, our business brokers have the professional expertise to help you with your financial assets and ensure the selling process remains confidential and effective.
STEP THREE - FIGURE OUT HOW MUCH YOUR BUSINESS IS WORTH
Unless you have evaluated the worth of your business, you have no way of thinking whether or not you are getting a fair price.
You can’t sell your business if you don’t know how much you should sell your business for. Unless you have evaluated the worth of your business, you have no way of knowing whether or not you are getting a fair price. You may be able to sell your business quickly, but if you do it at well below market value, it’s probably not worth the time you’ve saved. A business broker can help you with this.
The conventional wisdom is that a small business is usually worth a multiple of its annual cash flow. Still, many other factors may be at play, such as being in a desirable location or being in an industry that is poised to accelerate. A smart plan is usually to get an expert third party like a business broker who knows how to evaluate businesses to do an independent, high-quality valuation of your business.