Every business owner wants to know at some point what their business is worth. Should they place their business up for sale?
Everybody has an opinion on what a business is worth, including the owners, banks, accountants, lawyers and friends. However, what makes this most interesting is that none of these parties are going to buy your business. There are no comparable sales of similar businesses sold, unlike in residential or commercial real estate.
In reality what your business is worth will have little resemblance to other people's opinion on what your business is likely to sell for.
Only the market place will ultimately decide whether your expectations will be met.
The best advice is to find a business broker who is selling similar businesses to yours in the market place. They should have a database of past sales and be in a position to guide you as to what the most important party in the equation (i.e. the buyer) will generally pay for; e.g., supermarkets - buyers will generally pay about four times' net profit including stock.
Once you have made the decision to sell:
- have up to date Profit & Loss Statements for the last three years;
- a full list of plant & equipment;
- lease documents available
If the information supplied to the buyer is current, makes sense and appears to be reasonable value, then this is more likely to achieve a sale.
If you're thinking of selling and would like a free no obligation appraisal, please click here or phone our office on (08) 8361 3074.