So you’ve made the decision to sell your business. But how do you determine a sale price? It can be one of the trickiest parts of selling the business, but it’s also one of the most important. The initial price can determine how quickly the business sells, what kind of buyers it attracts, and even indicate how smoothly the entire process will proceed.
When determining a business’ value, it’s always a good idea to get an unbiased third-party involved. Business brokers have a set of standards and procedures that they use to valuate a business. These tools help a business owner determine the business’ net worth and set a price valuation that is reasonable and realistic given current market conditions.
3 Common Methods Used To Valuate A Business
- Assets. Perhaps the most black-and-white approach, an asset approach looks at the business’ assets and liabilities to determine business value.
- Market. This approach compares the price of similar businesses to the one being valuated. This approach relies on recent sales data to determine exactly how much buyers are willing to pay and how much sellers are wiling to accept – for such a business.
- Income. The income approach takes into account the gross business sales and anticipated income that the business will bring in over time. This method is more risky than the other two since it is based on future earnings, not today’s dollars.
Every business is different and not all valuation approaches are appropriate for all businesses. You’ll need to choose a method or combination of methods that best reflects your business situation in order to arrive at a valuation number.
Crowne Atlantic’s 360 Business Valuation Service Can Get You Started
Crowne Atlantic provides business valuation services, using our exclusive 360 Valuation Service. Through exhaustive research and comprehensive analysis of tangible and intangible factors, we are able to provide an accurate Opinion of Value. This type of business valuation provides business owners with an accurate present value for the business that can then be used to set a price.
Crowne Atlantic Business Brokers performs business valuations on all types of businesses for use in many different types of situations. To learn more about our business valuation services contact us at 407-478-4101.
