Subtle Factors that Dramatically Impact the Value of a Business
Theodore P Burbank FCBI
Examples are legion where
long established businesses simply close their doors. Many others are sold under duress
because of ill health, divorce, partner disputes, owner burn out, business slow down and
death. A business sold under adverse or distress conditions does not command much value.
Many are sold for mere liquidation value. Most businesses, like old soldiers, just fade or
are given away.
Conversely, we all have heard stories of companies selling for fantastic prices, and
often reportedly for all cash! The million dollar question, perhaps literally is
Why? After much thought, and almost twenty years of experience gained in
selling several hundred companies, the answer appears quite simple yet, beneath the
surface, complex.
The simple answer, in a word, is preparation. As with most projects, the quality
of the preparation in large measure determines the quality of the results. What
preparation involves is a combination of dynamic and subtle factors, many of which are so
obvious they very often are overlooked.
The Winning Strategy
- Decide that you will sell someday
- Prepare yourself for the sale
- Identify your ideal successor
- Realize buyers primary motivations are not financial
- Avoid the I’ll do-it-myself urge and
obtain professional assistance
- Understand the unique rules involved in small and
mid-size company valuations and sales
- Understand the factors, financial and non-financial,
that drive the value of your company
- Position your company properly
To Sell or Not to Sell
Perhaps the most difficult decision, as a business owner, you ever have to make may be
your decision to sell. Unfortunately, many business owners agonize over the many variables
involved in selling without ever making the decision to sell. Others will wait too long to
sell businesses are seldom sold too soon, and a significant number feel they cannot
afford to sell their only source of income.
Nothing stays the same. Over time a business changes and so does the owner. Eventually,
demands and needs of the business grow to conflict with an owner’s perspective and
skills. Something has to give. Will it be the owner’s personal life and health, or
will it be the business that suffers? Perhaps both?
- Only two end game options exist:
- the business is sold to family, employees or outsiders
- the business is closed.
By failing to prepare for eventual sale, the business owner allows the end game to be
determined by external forces. The result usually an attempt at sale under conditions of
personal or business distress.
Poor health, divorce, slumping sales, creditor demands, poor employee relations, lack
of operating or expansion capital very often are the symptoms of an owner who could have
sold, but failed to heed early warning signals. Indecision or lack of proper
planning and preparation can prove to be very costly. Costly not on
Buy A Business Or Sell A Business For Sale USA - UK - CANADA - AUSTRALIA
