Getting the Most Out of Your Business Before Selling - VR Business Sales Blog

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Friday, August 22, 2014

Getting the Most Out of Your Business Before Selling

JoAnn Lombardi
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Selling a business isn’t simple as most people would think leaving the entrepreneur with more options than they can think of. Taking the wrong approach could have a negative impact financially both for the seller and company, so knowing the advantages and disadvantages from a professional intermediary or Business Valuation Analyst (BVA) is something that helps determine how much your business worth.

Determining the value of a business is an intricate task and can benefit a business only if the following financial information is shared to reveal the earning power of a privately owned business such as: profit & loss statements, balance sheet and tax returns.  These are critical pieces that help prospective buyers compare earnings side-by-side with different businesses to see what their potential earnings are after an acquisition.

Now you ask, “how much is my company worth?” A simple business valuation that is thoroughly accurate and up-to-date before having your business placed on the market for sale is strongly encouraged. Buyers typically look for companies of quality to them.

Once you have asked yourself that important question, there are three major ways to estimate the price of a business. First, you want to calculate how much your company earns in terms of sales, cash flow and/or profits generated. The next method is to determine the Discretionary Earnings (DE), financial benefits you have accrued since ownership which applies to small businesses. And the last method is most commonly used by large corporations is Earnings Before Interest Taxes Depreciation & Amortization (EBITDA), ultimately excluding owner benefits (salary and perks).

Before cashing out, let VR help you find out how much is your business worth today! We are here to serve and ensure that you get the most out selling your business, just give us a call at a VR location nearest you.


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