Business Valuation Blog | Understanding Buying / Selling a Company

What's involved when you're preparing for a business sale?

Posted by Business Valuation Specialists LLC on Sep 26, 2018 12:51:00 PM

It doesn't matter whether you're getting ready to sell the business you've put your blood, sweat and tears into for decades or are simply ready to move on to your next big entrepreneurial adventure. When you're preparing for a business sale, a lot of business owners tend to skip right to the chase, simply listing the business for what it's current value is. But what if you could start by learning how to sell your business the right way, the way that would maximize your profit on the sale to get the best return on your investment during the final few months or years of operation? Here's a quick look on how to do it right.

What's involved when you're preparing for a business sale?

Unfortunately, when many businesses decide to close their doors, it happens after many years of dedicated ownership and hard work. At the point that the decision is made, many business owners just want to get done with the process. This is one of the worst approaches to take, as it means you lose some solid potential profit. Why? Consider how you've started running and building your business.

Did you build your company based on a lot of emotional decisions or did you spend some solid time studying the figures, looking at what made sense and going with what would work? Why would it make any more sense to shift from that approach now that it's time to sell your company? By taking the time to go through the process logically and thoughtfully, you can benefit from an increased sale price and better overall profits.

One of the best ways to go through this process is by starting out with a preliminary business appraisal. When you have a business valuation performed, the appraiser takes a solid look at your company's finances, assets, liabilities and overall condition. The appraiser will provide you with that information through a written report, which provides you with valuable insights into your company's current condition. But how does that impact your company's value?

Imagine that your business has a great reputation for innovation, but has a high level of bad debts in its accounts receivable or high overhead costs. When that shows up in your valuation report, you have the option to change those issues. By keeping your high points where they are or making them better while improving the rough patches in your company, you can quickly improve your company's overall value, allowing you to greatly benefit from the change at the time of sale.

You can then use the original valuation report and have a second report run after you've made changes, which helps you track how much the value of your company has improved. This, in turn, allows you to decide whether you want to make additional improvements or whether it's time to make the sale from an educated standpoint. 

By knowing what to do to get the most from your business, you can make a huge difference when you're preparing for a business sale. Take the tactics used by successful entrepreneurs everywhere whose companies sell for more by having a business appraisal performed. Make sure to check whether your business valuation specialist has gone through a certification process, as this ensures that they have an excellent mix of education, knowledge and experience to put to use for your business sale.

Topics: preparing for a business sale