Maximizing Business Value
As a Seller, you want to maximize the value of your business, in order to obtain the best possible price for your business, when you decide to sell. Remember that the real value is what an informed buyer is willing to pay, but you can influence the result. Here are fifteen suggestions to help you on your way to better business value:
- Develop an exit strategy early in your business history.
- Have available three years of clean financials including tax returns, income statements and balance sheets. Report ALL income and expenses!
- Document all Owner benefits such as family salaries, vehicles, etc.
- Maintain an up-to-date-Furniture, Fixture and Equipment (FFE) list with current fair market values.
- Maximize profits by increasing sales every year and by reducing unnecessary expenses.
- Sell when your business is strong, your market sector is still growing and you have a diversified customer base and product offerings.
- Make sure your lease has 5-10 years remaining and/or if you own Real Estate consider getting a current appraisal.
- Avoid any encumbrances such as lawsuits and liens filed against you.
- Develop a succession plan. Your business is more valuable if it is NOT dependent on you!
- Write off bad debts, clear out excess or obsolete inventory, sell off non- producing assets, and reduce liabilities.
- Have a clean, well-maintained facility.
- Document business operations processes and procedures and have systems in place to ensure business continuity.
- Have customer or supplier contracts in place when possible or appropriate.
- Consider having a 3rd party valuation doneby the Robert Hedges Company.
- Assemble a well qualified team including your banker, your accountant, your attorney, your tax advisor and a professional business intermediary/broker such as The Robert Hedges Company.