
Value your business before buying and selling
Value your business before buying and selling
As essential it is to increase the value of one’s business while running it, estimating the same while selling it off is indispensible. The parties involved, buyer and seller are both required to know, understand, calculate and account for all the aspects of business buying and selling fully.
Law governs the process of buying and selling businesses. It suggests the parties to bring in consideration a plethora of legal factors while dealing with its business as an individual entity and the other party. Not gaining adequate knowledge or not abiding by the law can prove to be troublesome, legally and financially.
The value of business is generally calculated in four major arenas, namely, Goodwill, Premises, Assets and Stock. These aspects need to be studied and evaluated completely to assess the value of the business while selling it. The seller must follow this to ask for a good profitable value from the buyer and for the buyer this is important for judging the fairness of the price asked.
Also, a disclosure of information must be followed to avoid breach of the Privacy Policies.
The seller must prepare a list of excluded assets and also make sure that the assets he is valuing are all in good working condition and mention the warranties, if any, to the buyer.
The seller must include their client database and whether or not this will be included in the sale of the business. The larger the client database who are currently using the business, the higher the worth of the business.
A buyer must ensure all the areas mentioned above are catered to. He must not just rely on papers for the value of the business. There are ways by which he can ensure the price he is paying for the business is fair and would be profitable for him in future.
Further methods in which the business can be valued further-
The value of the business is thus ascertained through various angles. As accurately measured the value, so is the understanding of the owner(s) of the business and as profitable as their operations.
2 different methods of valuing a business are included in the following link- Business.gov.au- Valuing a Business.
The value of your business is actually your value in the market as its owner. The determined value can be used when selling your business or when looking for investors. As you work on improving your business and helping it to grow you will see the value of your business grow with in leaps and bounds.
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