How to know the True Value Of Your Company
Thinking about selling your company?
More and more owners of small and medium sized businesses are considering selling their businesses as they approach retirement age. Of the thousands of businesses that will change hands this year, most will involve privately held companies selling for £100,000 to £10 million. Yet if a business owner has not experienced a merger or an acquisition or a disposal before, few will know what to expect or how to proceed. In the lives of entrepreneurs, few events are more emotional -or
significant, than selling their business.
That is why you need to appoint a professional expert to value and sell your business.
Business owners should always be thinking about the possibility of selling. The smart business owner should start planning for a sale years before they have any intention of selling. Set forth below are some answers to questions frequently asked by existing business owners.
The optimum time to sell is when your business is doing its best, not before you are forced to do so for health or financial reasons. This places you in the strongest negotiating position. You should actively start the process approximately two years before you want to complete the transaction by contacting an experienced business broker who can give you recommendations on how to maximize the value and marketability of your business. It usually takes at least six to twelve months to sell a business, and the buyer may ask you to stay on after the sale for a transition period.
There is no simple method to approximate the value of your business, but it should take into account both its assets and its earning power. The appraised, or fair market value of assets provides the minimum price you can expect. Earning power is a function of annual earnings, with expenses due to private ownership, added back to profits. This “Adjusted Profit” is multiplied by the appropriate capitalization rate (usually in the 2-5 range). Most Purchasers and Lenders place extensive weight on the company’s ability to generate earnings.
Ultimately however a purchaser will measure the value of a business against the return on their capital having regard to the risks and rewards involved.
To maximize your price, you need a record of profitability, a solid balance sheet, a strong market position, and a good management structure. Good accounting records are one of the most critical tools in maximizing value.
Maximising your business sale price: Put plainly, our team are professional specialists in the valuation and sale of businesses, focusing on maximising the price achieved for your business quickly, easily, confidentially and for the maximum value. We are passionate about delivering the maximum value for you. We have nearly 40 years of experience in the successful sale of businesses and we have the skills and resources to maximise the sale value of your business.
Call now for a FREE, no obligation business valuation. Your call will be treated in the strictest confidence and, of course, places you under no obligation.
Call now on 0800 046 1792