Business Valuation Blog | Understanding Buying / Selling a Company

Selling a Business? 5 Reasons to Get a Business Valuation First

Posted by Business Valuation Specialists LLC on Dec 29, 2015 12:00:00 PM


If you are wondering how to sell a business, do you think about how to attract buyers or how to position the business for a fast and fair sale? If the answer to either of these questions is yes, then you need a company valuation to help establish the business value and guide the sale. Learn 5 reasons you should get a business valuation before selling the business you have worked so hard to grow. 

1. A business appraisal gives you an objective formulation for business value - Preparing to sell your business is a highly emotional time. For many business owners, the sentimentality risks clouding their judgment and causing them to act against their best interests. When selling a company, getting a business valuation from a certified appraiser means you receive an objective estimation of business value that you can use to evaluate offers. When you have an independent valuation of a company, you ensure you will not miss out on a reasonable offer from stubbornness or sentimentality. 

2. Shorten the time to sale - Too often, business owners get into a lengthy business sales process because they fail to understand the true value of their business and price it accordingly. During an appraisal, a certified business appraiser can estimate the present value of the business and explain this to the owner. With the proper knowledge, an owner is more likely to price the business competitively and accept a reasonable offer. This results in a shorter time to sale than when an owner prices the business using emotions and ignores offers that truly are in good faith. 

3. Learn what to do to position yourself for a successful sale - If you really want a successful business deal, you will seek a business valuation well in advance of the sale. Getting the valuation of a company ahead of time helps you by essentially giving you an actionable list of ways to make your business more profitable when you go to sell it. After seeking an appraisal, you can tackle items on the list to make your business more desirable to potential buyers and more profitable for you when you go to market. 

4. Lends you credibility - When you want to sell your business, a potential buyer will want to know that the figures add up. Whether you are claiming to have a customer base of 100,000 or to make $5 million in profit per year, a third party is going to want to investigate these claims before purchasing the business. Since an appraiser will draw up a valuation report that goes into detail on your company's worth, it's very easy for the buyer to review the documentation as due diligence. 

5. Prevent you from undervaluing your business - While many business owners tend to overvalue their business, some go the other way and undervalue the business. Setting too low an asking price when selling may undermine the potential profits you could make. Let us say again, accuracy is key to selling your business quickly and for a fair value. 

Turn to Business Valuation Specialists for help finding a certified appraiser in your area who has experience performing business appraisals for companies just like yours. The appraisal can then help you determine your asking price and advertise your business opportunity with confidence and the facts to back up your estimation of your company's worth. 

Topics: business value, selling a business