How Much is My Business Worth?
You have decided to sell your business. One of the most important decisions you will make during this process is how much you are willing to sell the business for. In order to decide how much to ask for your business, you must determine how much your business is worth. Incorrectly valuating your business can have an impact on your future plans and therefore the determination should be carefully made.
The difference in perceived value by buyers and sellers is a main reason why purchases do not go through. Financial professionals use different formulas for determining a company’s value, and this can lead to a difference in the perceived value. One study by the Pepperdine University’s Private Capital Markets Project found that the methods for valuing businesses differed among private equity firms, business brokers and investment bankers. Some look at income, others consider assets, and market-based approaches are also an option.
If you are thinking about selling your business in the future, the value of that business is something you need to think about today, according to Libby Bierman, an analyst with Sageworks, a financial information company. “Since valuations are often based on cash flow or earnings, improving those should be a high priority,” she’s quoted as saying. Bierman suggests that “benchmarks can be an invaluable instrument to help business owners know how a company ranks relative to businesses in the same industry or same geographic area.”
With the help of an accountant, you can put together some benchmarks to help you determine how to eliminate weaknesses and build on your strengths. The last thing you want to do is be surprised by how little others think your business is worth when you decide it is time to sell.
The Stone Law Offices regularly assist clients with buying and selling a business. Call Las Vegas, Nevada business law attorney Craig Stone today at (877)905-0890 to discuss your business, its value, how the sales process works and your plans for the future.