Almost all owners who sell their own business do not receive their full value! Here at Bridge, our job begins with the appraisal of your business. Here are just some of the factors we use in this process.
Every owner has an idea of what his business is worth; those guesstimates are almost always based on a rule-of-thumb (which are generalizations that leave too much of a margin for error). To determine the actual cash flow of a business, items such as owner's salary, depreciation, interest and personal expenses should be added to the net income to reflect all the income the owners actually receive, which may increase the selling price.
Businesses whose owners can easily be replaced sell more quickly than those that require a higher skill level to operate the business. The business' value also fluctuates based on how well the business runs without the owner involved. For example. does the owner have managers that supervise each department or does he manage everything himself? This is a factor often forgotten by owners when comparing and analyzing a business.
Location, actual value. Growth Potential, lease terms. These are just a handful of the considerations that go into the average appraisal process. Unfortunately, owners will try to sell their business without consulting legal, financial or marketing professionals, avoiding vital considerations that must be addressed in the selling process. This leads to improper valuation, poor negotiation and possible misrepresentation of the business, leaving the owner at a great loss.
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