That would sell in the 2-3X multiple range so between $1 million and $1.5 million dollars. For example you have a transport company in Dallas Texas that makes $500,000 profit per year for the owner. Smaller companies sell in the 1-2X multiple range, medium in the 2-3X multiple range and large in the 3-4X multiple range. The multiple of earnings method calculates what the net profit of a company was for the last 12 months and then multiples that by a number between 1-4. The accepted valuation methodology by buyers is the multiple of earnings method. Part of the valuation process is looking at historical sales of similar businesses and comparing your business to those. What systems and processes are in place to run the business?.How reliant is the business on the owner?.What channels do new customers come from and what is the breakdown of each channel?.What is driving new sales and is that sustainable?.However, there are some common questions to consider, including: What a business is worth is relative to your individual business, the market and what potential buyers are willing to pay. There are a multitude of variables to consider and in this post, we'll cover them all to help you maximize the price you receive when selling your business. Your objective is to get maximum value, and you're assessing steps to prepare for the sale. Have we discussed all the “what if” scenarios that may play out in a particular negotiation?Īll of these things and more are immensely critical in using market dynamics to deliver you top value for your company.You have been building your business that you've put a lot of time, effort, and sweat equity into growing, and now you're looking to sell.What are the “hot buttons” of the buyer?.Who on our team should be on a particular call with the acquiring party during the next conversation?.We invest significant time in discussing strategy at every step along the way to maximize our negotiating efforts to deliver you top value for your company. We coordinate communication between your other advisors, such as your attorney and accountant, as well as the communications that are so critical between the advisors of both teams – the buyer and you, our client. We produce Confidential Information Memorandums (CIMs), conduct industry research, target buyer identification, financial analysis, deal structuring and marketing implementation. Our process of investigating and choosing to represent a client involves evaluating all aspects that drive value in the company such as breadth of buyers in the market, condition of the client company’s finances, whether sales are growing or shrinking, profitability and whether there are intangibles that can drive value. What Makes the Business Brokers from George & Company Different? What price is the right price for my business?ĭoes the deal structure minimize my tax liabilities?Īm I really getting enough to meet my financial objectives? Without some roadmap as to how you will exit your business you are bound to leave money on the table.īasic Questions Every Business Owner Should Ask Themself You don’t need to be a HUGE company to have an Exit Plan in place.
And it should also include contingencies for the unexpected – illness, burnout, divorce, and even the owner’s death. Any good Exit Plan - a clear and concise road map developed in concert with a team of advisors - should ask, and answer, all of the critical questions that owners need to consider when selling their privately held companies. When it’s time to sell, savvy business owners will execute their Exit Plan to harvest maximum value, and secure “spendable” liquidity for themselves and their families. After investing countless hours and dollars in growing your company, when is it time to start thinking about the next phase of your life? Honestly, it’s never too early.īusiness owners who are forced to sell, rather than those who plan their business transitions, often do so for a fraction of the true value of their business and on terms less than advantageous.
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