A Small Business Valuation can Help You Justify a Higher Asking Price.
When it comes time to sell your business a professional small business valuation should be performed by your intermediary to determine a Fair Market Value and increase chances of your business selling.Depending on the type and size of business I will sometimes suggest having a formal business appraisal done by a certified appraiser when the decision is made to sell.
Especially if your company has over a $2million in sales, there is a very good chance that a bank will be required to fund the deal and a formal appraisal will become necessary for the bank.
A business valuation performed by a formal business appraiser can help first-time business buyers over the hurdle of trusting that the asking price is fair and it goes a long way to providing a bank what they will need to fund the acquisition.
Regardless of how thoroughly your business is valued or appraised, recasting financials will be a central part to determining value. From small businesses and to mid-size companies sell based on a "multiple" of recasted earnings. Other factors such as real estate, location, inventory, age of business, condition of the business assets, industry trends and more will be factors to include into the overall valuation, but the bottom line is Earnings and how much a new owner can make.
