If you’re a business owner considering selling his/her business, it’s helpful to know some basic statistics regarding averages for selling a business.
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By TomHow much is my business worth? I’m uncomfortable with Mr. Schmerler’s answer: “…the price a Buyer offers you that you are willing to accept.” I feel a more complete explanation is: “A business is worth whatever the buyer, seller, and banker agree its worth.
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By TomThere are a number of factors which must be considered when answering this question, including: (i) the sellability of the business – is it in a highly desirable industry, has the owner crafted the company to make himself indispensable?; (ii) the asking price for the business – is the price based upon what the market will pay, or is it based upon what the owner needs to receive in order to retire?; and (iii) what’s been the trajectory of the business during the past three years – are sales going up, down, or sideways, and has cash flow been going up, down, or sideways?
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By TomThe process of selling a business, from the preparation of the marketing documents to obtaining a check at the closing table, usually takes about eight to twelve months. There are many steps involved in this process – so many steps that have to occur in a certain sequence – that many sellers are often surprised at the complexity. It’s sort of like elective surgery to correct a health problem. If you knew all the steps involved in the actual surgical procedure, you might not elect to go through with it. But, you keep your ultimate goal in mind, and just proceed through the steps – one at a time.
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By Tom