What to do before you value your business for sale
March 5, 2020
If you’re planning to get your business valued for a possible sale, there are certain points to consider before starting the process.
Getting a valuation of your business is a key part of a smooth exit from your business and there are some key considerations to make when calculating its value.
Here are some steps to complete before you start assessing the value of your business:
Learn about the sale process
The first thing to do is learn as much as you can about a sale, including the processes behind mergers and acquisitions.
Understanding these processes can help you plan and make sure you allow enough time to complete each stage of the sale.
It can take months to value your business and get it ready for sale before you even put it on the market.
Once you find a possible buyer, allow some time for negotiations, due diligence, contract signing and the settlement period.
Prepare your business information
Potential buyers may want to value your business independently, so it’s a good idea to get your business documents organised early.
When it comes to finances and assets, you will want to have financial statements like cash flow statements, details of physical assets like buildings, and details of other assets such as intellectual property.
Keep any legal documents together such as insurance policies, as well as registration papers like business name certificates or licences.
Make sure you have your business information on hand, whether it’s business plans, sales reports or marketing procedures.
Possible buyers will also be interested in your staff, supplier and customer information, including employee job descriptions, supply agreements and customer profiles.
Review your lease
The physical location of your business is an important factor, so you should take a look at your lease to ensure that there is still a reasonable tenure left for the buyer.
Your location may represent a portion of your business’ goodwill, so having a secure lease may help you get the best price for your business.
Engage a business advisor
Consider getting professional advice from an LDB accountant or business advisor to get the most from your sale and avoid costly mistakes.
Our experienced and professional staff will help assess your finances, including debt, cash and working capital.
They can also analyse the goodwill value of your business, help identify trends in your market and other activities.
If you need help valuing your business and getting the most value from a sale, give us a call on (03) 9875 2900 or fill out the contact form below and one of our business experts will be in touch.