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.