Get Real About Value

Get Real About Value

Add-Value

SELLERS VS. BUYERS
Sellers often feel that buyers or appraisers undervalue the business because the buyer doesn’t understand the business model, or because the valuation methods fail to take into account unique qualities of the business.

THE IMPORTANCE OF ACCURATE FINANCIAL RECORDS
While it is true that different valuation methods may result in different values for the same business, one thing that can’t be overstated is the need to have accurate financial records. Most company financial statements contain errors, so it pays to go through them well before any potential sale to ensure that your numbers will hold up to the rigors of an audit or other intense scrutiny during due diligence.

DIFFERING VIEWS OF THE BUSINESS
In addition to potentially inaccurate financial statements, another reason for differing perceptions of value is how the buyer and seller view the business. Sellers would do well to consider valuing the company from two perspectives: that of a financial buyer, who is evaluating the business as a stand-alone investment with no anticipated synergies, and that of a strategic buyer who may see additional value due to synergies such as acquiring a competitor’s customer base.

DETERMINING A REALISTIC VALUATION
In each case, a realistic valuation of a company should be determined early on. The seller should have made decisions about the asking price and terms, the expected price and terms, and the walk away price and terms. These decisions should be made before getting caught-up in “deal fever.”

Welcome Aboard

Welcome Aboard

Welcome to the inaugural post of Sell Your Business for More, a new blog which will focus on the when, how, and why of selling a business. We’ll cover a lot of ground along the way, with helpful tips and warnings about traps to maximize the value of your business and position yourself to best achieve your goals.

Topics will include the timing of a sale, how to structure the transaction, and steps to take in the time leading up to the sale to allow for a smooth exit. And with the privilege of editorial discretion, we’ll more than likely meander off into some other discussions too.

As part of the blogosphere, we’ll also be on the lookout for helpful links to other blogs and resources. We are hoping to post contributions from guest bloggers on tax planning, marketing, valuation methods, and other related issues which fall outside of our professional expertise. But most of all, we’ll be looking to engage you, the reader, to find out what resonates, what doesn’t, and how we can help you run your business better.

At this point, we’re thinking about posting blog entries twice a week, most likely on Tuesday and Thursday. We’re excited to engage readers in a slightly different medium and hope that you will provide feedback in the form of comments, questions, or requests for specific topics. Our monthly e-newsletter will continue with articles of general interest to business owners.