Busting the valuation myth
When clients put their businesses up for sale, usually it is the culmination of decades of hard work and very likely their swansong in the world of commerce.
It's your role as a trusted business adviser to help them get it right - first time!
The single most troubling question for them is "how much can I get for my business" - so what's your answer to them?
Would you know where to start?
A business is of course worth as much as somebody is willing to pay for it, not unlike a house. But even the nicest of houses will only fetch so much in a given street. Remember......location,location,location?
Just as we see some house sitting around for months or years because their owners have unrealistic ideas on value, so do businesses fail to sell. Like houses they can suffer from a tarnished reputation and eventually they go for less than they would have done had the owner been more realistic at the outset.
So, your starting point in the conversation has to be around value but unlike a house there are industry norms and you cannot usually check up on the actual sale price of other similar businesses. The nearest to a guide is what people overhear on the rumour mill at the golf club of "somebody" who sold for a small fortune.
Now expectations are set, which is where the problems begin and usually snowball further. Once price is the determinant for a seller their eyes can glaze over and they are blind to the problems their business may have that will be laid bare during due diligence.
It pays to forget price at the outset and focus on whether the business is "sales-ready" . This requires a pair of independent eyes - yours !
Small but significant improvements can drive the value significantly higher or at least make it attractive to a buyer.
Getting the sales process right starts before it is put it up for sale – clients only get one chance and you can help them get it right. Check out our free guides here.
Selling a business is not a destination, it is a journey and the time to prepare is now – with your help.
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Henley Business Brokers are independent specialist business brokers and business transfer agents, working collaboratively with accountants, focused on owner managed companies in the Manufacturing, Engineering, Fabrication, Industrial, Distribution, IT and B2B Service sectors, with turnovers of between £0.5 million and £10 million.