The Point: If you don’t know where you’re going, any road can get you there. Likewise, if you don’t know what your business is worth through a proper business valuation service, establishing business objectives/goals can be a guessing game. Establish objectives/goals too low, and potential is barely reached. Set them too high, and you may never achieve them even in the best of circumstances. A business valuation service establishes the worth of your organization, and as a leader you’d better know what that value is in the event your exit strategy is to sell. In this post, we’ll look at business valuation services as a roadmap to identifying ways in which you can get more money for your business… Enjoy!
We Have Financial Statements… That Should Be Good Enough
At Tip of the Spear, we recommend to clients who are approaching the conclusion of their business career a solid succession plan or exit strategy. As part of your exit strategy, you’ve decided that you’re going to weigh several options. You may sell the business through a business broker. You could consider providing it for sale to your employees as part of an Employee Stop Option Purchase (ESOP). You might consider handing it down to your heirs as part of a larger success planning moment.
Regardless of the exit strategy you choose, knowing the value of your business can help you get more money. However a fatal flaw that I see many owners falsely create is that their financial statements will suffice. In and of themselves, financial statements do provide a degree of perspective regarding the business and its inherent value. However the same financial statements often omit key organizational pieces that could raise the value. Items such as furnishings, building ownership, geographic location, customer records, intellectual property, etc. account for more business value than a profit/loss statement can reflect. As such, we see business valuation services as a best practice when it comes to selling a business.
Business Valuation Services
Business Valuation Services help you quantify all parts contributing to a company’s value. Identifying the value therein can greatly assist you in establishing both proper asking price for the company as well as accepting the right offer. Typically, we see buyers (External or Internal to the organization) requesting their own business valuation service to collect all pertinent information in an effort to protect them from paying too much for a company.
Purchasing an independent business valuation service can also be used to justify the buyer’s offer to the seller (i.e., Why the offer is coming in at $X instead of $Y as listed). We’ve seen episodes where a bid to purchase is accepted because the business valuation service provided such a thorough report to the seller.
At Tip of the Spear, we believe that you can and should look to sell your business for as much as possible. Securing a business valuation service as the seller helps establish your selling price as well as acceptable bid to purchase levels. Requesting all potential buyer’s bids be considered serious if they in like kind provide their own is a great move in order to sell and get more money for your business.