Rarely does anyone come to us to sell their business on a whim. People who approach us have usually been thinking about it for a while. Perhaps they’ve reached a target age, or a target business value. Maybe they’re ill, or their spouse is. It could be that their company is at a point where they know they’re not the right person to take it to the next level, and in order to survive, it needs to get to that next level. Whatever the reason, they also usually come to us armed with questions. It’s understandable. They’ve been thinking about doing this and now want all the answers. We’ve been brokering businesses for a long time and know that some questions are easy, while others are nearly impossible to answer.
Inevitably, the first one is “What’s it worth?” That’s an easy one, and if an owner has been smart about it, they may even have a good idea of what it’s worth already because they’ve had regular valuations done. But most people haven’t. In that case, we can do a full-blown valuation for a fee that would then be waived if you sign with us to sell the business, or we can provide an opinion at no charge. In order to do that, we need three things:
- Prior year Profit and Loss
- Current YTD Profit and Loss
- Seller’s Discretionary Income, including salary and other perks i.e. insurance, car payments, etc.
In short order, we’ll be able to give you a thumbnail idea of what it’s worth. Again, an easy question to answer, although another tongue-in-cheek answer to the “What’s it worth?” question might be, “Whatever a buyer is willing to pay.”
Next: How Long Will It Take?