Pricing Dynamics in a Business Sale – Pricing a Business
There are many tools available, if you want to determine the pricing dynamics in a business sale. When selling your business, there is no particular price that you can use. The final price rests solely on the buyer and the seller. How bad does the buyer want to buy? How strongly does the seller want to sell?
These questions play a domineering role towards closing any sale:
Compare Before Proposing an Asking Price
If you want to sell a business you can investigate and see how much a similar business is being sold. You can also contact a Business Broker and/or the national trade association/s where applicable. These organizations keep valuable information about businesses in key industries and are always willing to share it with anyone interested.
Hiring a Business Broker
Moreover, you could hire a Business Broker who could do all the grunt work for you and also help you broker the deal eventually when buyers begin to show up or bid to take over your business. You can sell your business based on the asset that you have or monies that you generate including the cash flow, debt payments and revenue base.
Collecting Business Financials
Ensure that your business records are in order. Any serious buyer would want to look at your books. So it is imperative that your financial statement be in good working order. Income statements, cash flow statements, and balance sheets are what potential buyers usually ask to see.
Preparing List of Assets
You will also need to know the full estimate of your physical assets. Prepare them in a list and price them accordingly. Prospects that come around want to see a comprehensive asset list including the price of purchase and the current market value. This plays a large role in determining how much your business will go for.
A business that is dependent on the owner or certain employees affects price. You need to make everyone relevant in the workplace. Appoint a deputy manager and key personnel in all the departments. This delimits risk and quells fears that the company would crash if a selected few leave.
In conclusion, try to focus on the core strengths of your business. A buyer will still go ahead with a sale even if he notices certain weaknesses in a business. Buyers do not necessarily tilt towards diversified businesses. They are more concerned with the assets and the strengths of a business. The pricing of a business will go up if you can improve your financial ratios and are ready to present before attempting to sell to buyers. In other words you need to prepare your business for sale before putting it for sale.
About The Author
Alam Qureshi is a Certified Business Intermediary (CBI), Certified M&A Professional and Broker of Record at ProClient Brokers Inc., Brokerage. He helps business owners learn how to sell a business so they can get the maximum value for their company. call us 416 364 5550 or CONTACT US to get in touch.
Date modified: 7-20-2019