How To Value A Business Or Company

Your financials will have a huge impact on the value of your business. The key numbers that potential buyers care about are: annual revenues, adjusted earnings for owner, cash flow, and profit margins. To get the highest price for your business, you not only have to have healthy financials, but you also need to have clean and organized financials (balance sheets, profit and loss statements, tax returns, accounts receivable and payable, and other recordkeeping).

The assets that you own will factor into the final price of the sale. Tangible assets include real estate, furniture and fixtures, equipment, machinery, inventory, intellectual property, accounts receivable, and more.

There’s a reason that franchises are so appealing to some buyers – because the systems and processes are proven and in place. The more efficiently your business runs, the more it’s worth.

If you have a strong management team that will remain in place after you sell the business, you’ll add value to the business. You alone, could be enough, if you’ll agree to stay on for a pre-determined period to ensure a smooth transition for the new owner.

One of the primary reasons people buy a business, rather than start their own, is so that they’ll have a built-in base of clients or customers. The larger – and more diversified – your customer base, the higher the price you’ll get for your business.

Every business has “intangible” assets, and the trick is to articulate these to potential buyers so that they add to the value of the business. Examples of these intangible assets include: a strong record of growth, avid customers, contracts with vendors, brand recognition in the marketplace, unique products or services, high website traffic, below-market leases, strong social media following, market dominance, future opportunities and earnings, and more.

If you owe money (to lenders, vendors, or anyone else), this would be subtracted from the final proceeds to you from the sale. Other obligations, such as unfavorable contracts or real estate leases could also lower the value of your business.

Whatever your business is worth today, it could potentially be worth even more if you take certain steps to prepare for the sale. As experts in the process of selling businesses, we can recommend changes and improvements that will make your business more appealing, to a wider range of buyers.

One of our top strengths is identifying and presenting the unique value propositions of your business to potential buyers. In our experience, most buyers will pay for value, once they understand it.

As experienced business advisors, we can help you get the highest price for your business, on the best terms, while protecting your legacy. We can also help get the deal done quickly, while ensuring a smooth transition. We’re located in Denver, and we sell businesses throughout the Denver metro area, Front Range, Colorado, Wyoming, and New Mexico. Our primary focus is businesses with annual revenues of $500,000 to $30 million, and we work with all types of businesses (trades, manufacturing, retail, services, distribution, tech, e-commerce, and more).

For more information about valuing a business or to set up a free consultation with an experienced professional, please call 303 - 474 - 5582, or e-mail info@rockymountainba.com.