Commercial Business Sales Lake San Marcos – Rules of Thumb for a Business Valuation

When getting ready for commercial business sales Lake San Marcos, one of the first things you should do is perform a business valuation. The purpose of a valuation is to help you know how much your business is really worth. It also helps you set a realistic and competitive selling price. In doing this, you have to objectively analyze your business, study the current market as well as work with experienced professionals. The right business broker in San Diego will help with the valuation.

While there are many acceptable business valuation methods available, the method used will depend on the size of the business, industry it is in and circumstances of the sale. Here are some important things you will have to do when getting ready for a valuation.

Prepare financial statements

When getting set for commercial business sales Lake San Marcos, it is your job as the owner to gather all the financial records for the last three years. This should include cash flow statements, income statements as well as balance sheets. If you have not been in business for more than three years, you may want to consider using the projection model. You then need to work with an expert to transform the income statements into seller’s discretionary earnings statement. This takes into account non-recurring purchases as well as discretionary expenses to give an accurate reflection of the business’ value.

Establish asset value

You now need to establish an asset value of your business. To do this, start by estimating the value of the tangible assets that your business has. This should include every physical asset including equipment, inventory and fixtures. Next you have to estimate the intangible assets. This includes contracts, brand recognition, and intellectual property.

Asset valuation will provide you with a clear picture of your company’s current value. It does not, however, reflect the value of the company’s earning potential. It is thus lacking since buyers are interested in the future earnings of your business.

Use price multiple

Price multiples offer buyers a tool to estimate return on investment. Your business broker in San Diego will help you determine the multiple that applies to the geographical region as well as your type of industry. When combined, these numbers offer a fair estimate of the business’ sale price.

There are many more considerations you have to make in a business valuation. While the process may seem complicated, working with a business broker helps smooth everything out. The best thing about involving a broker in commercial business sales Lake San Marcos is that the broker doesn’t just rely on textbook calculations to value and price your business. They rely on their own experience to set the most competitive price.

Commercial Business Sales Lake San Marcos

What Client’s Say

We Couldn’t Be Happier

"When we thought about selling we had no idea what our business was worth or how to go about selling. What you were able to do was to cut through the fog so that we understood the valuation issue and had a comfort level with the process. As you know we ended up selling for somewhat more than the original valuation and we got all cash and our CPA loved the way our tax liability was minimized. We couldn’t be happier!"

Over $250,000 More

"Our first contact with you shocked us when you suggested that we wait 18 months before selling because you believed that if we hit our projections that the value would be significantly greater. As it turned out we not only followed your advice but also got slightly over $250,000 more than we originally had hoped for. It is seldom that we have had the opportunity to deal with a firm that doesn’t want both money and a commitment NOW. It was clear and obvious that you had our best interests at heart."

You Got the Valuation We Agreed On

"You did a great job on the sale of our business in really beating the bushes for buyers, including a UK company that was an active suitor. You managed to get the valuation that we had all agreed upon and got it substantially all in cash and got the transaction closed with little to no problems or expensive lawyers involved."

Thank You for Handling Our Business

"Our business was smaller than what your firm normally handles but it was a BIG part of our net worth and savings. Thank you for handling our business and we were very pleased and delighted with the results."

More Than Anticipated

"Our transaction was involved as we had different corporate entities located in different states. Our only regret is that we didn’t retain your services before 2012 when we paid $25,000 to a firm in Texas that did a valuation and market analysis for us before then failing to do anything in the way of trying to sell our business. You got it sold for more than anticipated."

Prepare financial statements

Establish asset value

Use price multiple

The Sales Process