How Do I Determine The Value of my Business?

When selling your business, it can be a complicated process to properly determine the value of your business.  The price will have to satisfy both the current value of your operating business and the market expectation.  Creating the right pricing strategy for a business is a top priority at A R Business Brokers and one of the biggest decisions that a seller has to make. 

To determine value, one of the first things buyers will look at is the cash flow of the business.  The most common measures of cash flow are EBITDA and Free Cash Flow.  Even though these numbers will be of great interest to the buyer there are additional components that are built into determining the optimal value of a business. 

The two most common ways to determine the value of a business are:   

  • A formal Business Evaluation
  • Professional Brokers Opinion of Value (BOV)

BOV is an option to consider strongly as it pulls in elements of the market conditions, the experience of the Broker as well as an analysis of the industry.  If you select this method, there are a number of components that will be considered:

  • Intimate understanding of the industry
  • The market expectations
  • The lending practices in the area
  • The comparable market conditions over the past several years
  • The personal experiences and analysis of the business at the time of sale

The results of this list will be used to determine the pricing strategy for your business.  Following this list and the expert advice of the A R Business Brokers team will allow you to avoid delays from a lack of interested or qualified candidates.

For more information on this process or to have a BOV evaluation for your own business contact the expert team at A R Business Brokers.  As experts in the industry, we are happy to review the steps and help to create the perfect pricing strategy for your business.

Avoid Sales Missteps When Selling a Business

There are a variety of reasons why a business owner decides to sell their business.  When the time comes, there is a choice to sell on their own or hire a business broker. Business owners who decide to sell on their own face 4 common missteps that can result in a less than favourable result. 

Working with a professional will help avoid these 4 common mistakes:

Know the value of your business

Depending on how long you have owned your business, the value could have significantly changed since purchase.  Value is based on a number of factors such as technology, assets, location, financial statements, industry and many others depending on the type of business.  Determining the value on your own can result in leaving out a crucial part of the equation. Having a professional evaluate your business will provide an accurate and competitive price supported by relevant data.

Selling a business is like selling a house.

This statement could not be more false. Evaluating a house and evaluating a business are two very different things.  There is a proven formula for evaluating a business that will produce an accurate reflection of what the business is worth. This evaluating is best performed by an individual with experience who can understand and evaluate company data.  Pricing based on comparison to a similar business is inaccurate.  Value is determined by evaluating many parts of the business rather than comparisons. 

Market Conditions don’t matter

Market conditions will always be a factor in determining the value of a business.  The market demands are not the only factor but it will be a factor in determining what buyers are willing to pay.  Working with a professional who is familiar with the market and market trends, will benefit the sale of your business.

I’ll sell myself to avoid fees

There are times to look for ways to save money but selling your business is not one of those times.  Selling your business yourself could come back to haunt you. There are a number of factors that can be overlooked simply due to inexperience.  A professional will have all the connections you need to create a solid contract that is a win-win for buyer and seller.  You want to be well aware of any issues that could arise before the transaction is complete.  A business broker will provide that level of assurance and help navigate the entire process.

AR Business Brokers has a team of professionals to help you through the entire selling process.   Selling a business is a big undertaking, therefore, working with experienced certified business brokers is the best way to ensure a seamless transaction.  To inquire about our FREE no-obligation business evaluation contact us today.  We are located in Mississauga and we specialize in selling businesses in the GTA.  Satisfied clients are our greatest achievement – we are always here to help.   

Is it time to Sell? Let’s find out!

You have taken the time to grow a successful business, so when, if ever, is the right time to sell? 

Well, that’s a great question – and one that A R Business Brokers Inc. can help you with!

There are a number of reasons why successful business owners choose to sell their businesses, and whatever your reason is, we are here to support you through the entire process with our team of experts.  We are happy to help our clients make the profit they deserve – after all, the business was built on your ideas and your hard work.  There are a number of factors to consider when looking to get the most value out of your business, and we are happy to guide you through all of them. 

Let’s review the top 3 resources A R Business Brokers can provide to make the sales process a success:

  1. Buyers: We have some great news to share – we have a wide variety of qualified buyers that are looking for the right business to invest in.  Your business will be left in good hands!  The turn around time to sell a business can take years so having a database of qualified buyers can significantly reduce the extended sales cycles. 
  2. Sellability Score: Our team has a sophisticated and proven system to evaluate your business and ensure you receive the return on investment that you deserve.  We will take you through a proven process to assess the value of your business and place you where you need to be to garner the interest to sell your business.  Our sellability score is how we determine your market strategy to attract the right buyer. 
  3. We’ve been there too. As professions, our team has owned and sold businesses, therefore, we speak your language as a successful business owner and are able to guide you through every step of the process with ease.  We provide expert knowledge for selling in various conditions and are able to use the proper language, terms and market conditions to our advantage.  The real estate market is always shifting, and knowing how to create an advantage in any market is our strength. We are more than happy to share your journey to financial and professional success together – your success is our success.

There are a lot of moving parts to a transaction of this size and we have all the resources and contacts you need to ensure your story is a success. Your work has created a business that is worth taking care of and we will ensure you are taken care of in a timely fashion to allow you to move to the next phase of your life.  The full picture is important to understand where all the pieces fit and we are happy to provide that big picture view.

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