What is your business worth?

When the time comes to sell your business one of the first questions is “what is my business worth”. While many business owners genuinely do not know, others have an unreal expectation.

While it can be a little cliché “your business is worth what someone will pay for it” .

There are number of rules of thumb to value a business, and everyone will have an opinion, however’ when it comes down to actually achieving a sale of your business it will be dictated by Price, Presentation, Promotion and the negotiation through the sale process.

Here I will outline the influence of each of these

Price

The final price paid for the business will be dictated by a willing seller and willing buyer. Regardless of opinion, if the price does not represent fair value for both parties a sale will not proceed.  Fair value is in turn influenced by Presentation and Promotion .Without all three working together the final price achievable may be compromised.

Presentation

The presentation of your business will influence the final sale price and in fact whether it sells at all.The more time you take in preparing for your future sale the better the outcome will be. Your exit plan should start well before you want to sell and be done in consultation with your professional advisors.A well planned exit ensures the sales negotiation will achieve you the best possible sale price based on the overall presentation of the business from the first meeting with your Business Broker through to all inspections of your business by buyers.

An investment in thorough preparation and presentation will reward you on settlement day.

Promotion

The sale of your business may be the most important sale of your life. The last thing you should be considering when selling is to try and “save money” on promotion.Promotion will bring the buyers. Having more than one buyer will drive up competition, desire for your business. Having multiple buyers competing reduces a buyer’s ability to negotiate which in turn will optimize the sale price and terms and conditions that your Business Broker is able to achieve on your behalf.

A successful sale will only be made under the right conditions, at the price and terms that are acceptable to both parties.  Don’t leave the sale of your business to chance; get your plan in place to achieve the best outcome by aligning the three “P” s !

Linda Harley

Phone 04 88103310