Commercial Business Sales Warner Springs – How is a Business Valuation Done?

When it comes to commercial business sales Warner Springs, the first and the most important thing you must do is know how much your business is worth. That way you will be able to have realistic expectations as well as set a fair selling price. For this, what you need is a business valuation. While it is possible to do it on your own, you will have more accurate results when you leave the valuation work to a professional. An experienced business broker in San Diego will be able to help with this.

An important point you need to bear in mind about business valuation is that there is no ‘magic formula’. This is mainly because valuations differ from one industry to the next and from one geographic region to the next. The size and type of your business will further influence the valuation method that is used. Your business broker will further let you know that the buyer’s perception of both or either Opportunity or Risk will also influence the valuation method that is used.

There are so many books on the topic of business valuation. However, in commercial business sales Warner Springs, getting an accurate valuation requires more than textbook calculations. That is why the work has to be left to an experienced business broker.

Most people think the company’s revenues determine value. That cannot be far from the truth. This is because if a business makes $10 million annually and loses money, does that mean it is worth more than a business that does $5 million and makes $1 million annually? A great starting point is usually Return on Investment (ROI). However, before you get started, you must understand Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA). You also need to understand after management expenses after removing the Owner Perks.

Needless to say, buyers have varying expectations and requirements when it comes to ROI. With that in mind, ROI will clarify valuation but will only be one of many considerations made in a business valuation. Other factors considered include:

Stability of margins
Vendor or customer concentrations
Trend of revenues
Expiring contracts or patents
Technology changes in the industry
Environmental risks

With all these factors needing to be considered in a business valuation, the only people suited to accurately offer a Fair Market value of a business are the ones involved in the sale of businesses on a regular basis. Working with a business broker gives you the best chance of getting an accurate valuation. Most business brokers in San Diego offer business valuation for free.

Commercial Business Sales Warner Springs

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."

The Sales Process