Selling For A Maximum Value / by

You want to sell your business for maximum value. Here are three solid guidelines to make that goal a reality.

Focus valuation discussions on the future potential of a business – not past performance

  • When you negotiate valuation with a potential buyer, it is essential to focus the discussions on the future cash flow potential of the business. A buyer will be more confident and engaged in investigating the purchase of your business when they can perform a business analysis and thoroughly understand the company’s financial performance.
  • To be effective in valuation negotiations, sellers will want to conduct rigorous industry research and analysis; develop defensible financial projections; and position both pro-forma financial and strategic benefits (including revenue and cost synergies) of the sale/acquisition/transition to a new owner.

Don’t leave money on the table by neglecting the intangible value of a business

  • At a minimum, expect a buyer to pay at least the basic value of your business.
  • Too often, sellers don’t recognize that they have the opportunity to monetized the intangible value of the business. When they try to go it alone, inexperienced sellers do not properly substantiate, support and quantify the intangible value of their business to maximize the sale price.
  • Applying proper valuation methodologies and techniques for your industry can help you maximize the value of your business that you can command. It is also important to use historical financial statements to sell the advantages of this purchase opportunity for the buyer.

Negotiate a winning deal structure

  • The structure of the transaction is just as important as negotiating the valuation.
  • To secure and preserve the maximum value of your company, it is critical to build a strong exit team that can effectively structure a winning deal and negotiate the terms and conditions of the transaction itself.

These three guidelines will translate to maximizing the value a buyer will pay for your business.

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