Essentials for Selling any Business

Selling a family business is still one of the most important decisions that you will ever have to make because it is a final decision, not like other decisions you have had to make running the business.

It is my firm belief that in order to sell any business there are a few essential things that have to be considered:

  • An in depth analysis of the business to determine the value and if the business is actually saleable
  • What will motivate a buyer to buy the business
  • What is the expected level of future profitability
  • If a business fails to generate a commercial salary for the owner, then it cannot have any goodwill
  • Assess and analyse your business from a buyers point of view
  • Businesses mostly won’t sell or generate genuine interest unless it represents fair value in the market place
  • The market is willing to pay for “goodwill” , but they will only pay when they confidence in the information that suggests there is goodwill
  • Value must relate to market value, not just some theory
  • The closer the asking price to the market value, the quicker the business will sell
  • The presentation of clear financials is paramount
  • Any adjustments to financials must be clearly defined why adjusted
  • R O I ( return on investment) is determined by the level of risk
  • The buyer is not buying you, they are buying your customers and your system’s
  • Value is built around the concepts of risk and return
  • An understanding of the future profit of a business is essential for an accurate appraisal or valuation
  • Cash flow and risk are 2 of the most important factors in appraising a business
  • To get maximum price you need to approach selling with the determination that you devoted to building your business value
  • Getting maximum sale price ultimately depends on whether your business can assure buyers that its value and success is sustainable and verifiable
  • It is only by the application of sound business principles that a reliable and defensible valuation can be obtained ( W Lonergan)
  • Capitalisation of Future Maintainable Earning’s (F M E) most common method of determining most small business value

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