When you launched your business, you were excited about the future and the possibilities of watching it grow — and you probably didn’t give much thought as to how you’d exit many years later. Then the years flew by and you had no time to worry about tomorrow.
But it’s a hard fact: One day you will leave your business. And you need to ask yourself these critical questions: Will you transfer your business to your kids? Will you sell it? What kind of buyer will entice you? What is your company worth? And most importantly — how will you leave your company on your terms and make the exit profitable?
The two best ways to exit a business are to sell at a multiple of profit or sell to retire, and both can be accomplished with some research and strategic planning. However, life can get in the way. You or a family member could suffer health problems. You may go through a divorce, or you could run into financial challenges. Many circumstances can force an owner to sell his or her business sooner than planned, and an unprepared business owner can be caught off guard.
And since most business owners have the majority of their net worth tied up in their company, it’s important to track your company’s value in the market through every lifecycle stage. You can do this by finding businesses in your industry that have a similar customer mix, comparable annual revenue, and a similar number of employees. But unfortunately, as noted by Ibis World Report, most business owners do not know what their business is worth, which could hurt you financially down the road.
So how do you determine what your business is worth? Some company owners hire a Certified Business Appraiser (CBA) to create a “Certified Business Valuation”. During this in-depth process, the CBA will collect data and issue a formal valuation, to be used in cases of:
• Gifting shares of a business to children as part of a succession plan
• Merging or selling to another entity
• Adding a new shareholder or partner on board
• Raising investment capital
• Establishing or updating an employee stock ownership plan
• Dealing with a divorce, or death of a spouse or partner involved in the business
• Estate planning
• Navigating legal disputes
The process to obtain this detailed valuation can be lengthy and is always expensive. The cost of a formal valuation can range from $3,000 to $50,000. The larger and more complex the business, the more significant the price tag.
But there is a faster way to learn what your business is worth: an “Opinion of Value.” While less formal than a certified business appraisal, an Opinion of Value is accurate and can offer more reliable information, since it includes both current and real-world sales data. If you’re thinking of selling, this may be all you need. Ultimately, your business is worth only what someone is willing to pay for it.
At Crowne Atlantic Business Brokers, we create value ranges and Opinions of Value for business owners on a weekly basis. This information allows company owners to then create a plan of action for exiting, retiring or keeping and growing the business until a sale will yield an amount that makes it worth selling.
Contacting a business broker such as Crowne Atlantic is a great place to start preparing for your future. Unlike CPAs and attorneys, we work daily to understand company values and what buyers are willing to pay. We have our hands in various markets, and spend weeks delving into the books of companies in various industries. A competent broker should be able to tell you what your company is worth using only basic information such as tax returns, historical performance and number of employees. Brokers are in a unique position because they have access to sale data through professional organizations. The process is quick (usually 48 hours) and can even be done gratis.
A certified business broker is an important part of your team when you’re preparing to sell. Look for one with experience and a long track record of success. You’ve spent time and energy growing your business — so put it in the hands of a professional who can close the deal and get you the price you want and rightly deserve.
Jackie Ossin Hirsch is a licensed business broker with over two decades of experience. She has produced more than 360 business valuations and is a recognized expert in this field.
As the founder of Crowne Atlantic Business Brokers, she has extensive business sales experience, including transactions involving stock, cash, seller financing and SBA financing. She has worked on more than 400 transactions and specializes in companies with a value of $1MM to $50MM and EBIT from $500,000 to $10MM.
She has the distinction of being a Certified Business Intermediary with the International Business Brokers Association. With her experience and time spent in the marketplace, Jackie is able to confidentially match the right buyer or investor group with the right business opportunity, ensuring a successful transaction and transition.
As a result of her dedication to her clients, Jackie has won numerous business brokerage industry awards from the Business Brokers of Florida and has been a Multi-Million Dollar producer every year. She has a warm personality and identifies with every client who contacts her for help.
She is a graduate of the University of Florida, and has studied International Business at the University of Costa Rica while becoming fluent in Spanish. (Se habla Español.)
As a Central Florida native, Jackie has intimate knowledge of Florida business locations, neighborhoods, infrastructure and demographics. She has traveled to over 30 countries and is adept at relating to any buyer or seller.
