22 Nov Around the Web: A Week in Summary
A recent article posted on BizJournals.com entitled “Top 5 rules on preparing your company for sale” explains how the best time to begin preparing your business for sale is right now. The article highlights these main rules to follow:
- Start auditing your financial statements now as these will be required by the purchaser.
- Keep appropriate, complete corporate books and records so everything is ready to be presented to a buyer when the time comes.
- Obtain a professional valuation of your company so you can use this as a roadmap for growing your company and ultimately maximizing the exit price.
- Use the valuation of your company to determine what assets are superfluous and will not be valued. This can also help you make future decisions with your business strategy.
- Start the process now for finding a second in command who could easily replace the founder of the company. This will be very valuable to the future buyer after the sale is made.
Starting to prepare your business for sale now will help make the sale process much easier when you decide it’s time to sell.
A recent article from The Axial Forum entitled “Your Company Probably Isn’t Worth What You Think It Is (and How to Change That)” gives an overview of common mistakes business owners make which decrease the value of their business, as well as tips for increasing the value. The article notes three things that many owners do which decrease the business value: focusing on tax minimization (which also reduces profits), driving revenue rather than margins, and ignoring business risk.
Luckily there are several steps a business owner can take to increase the value of their business:
- Work with an objective advisor to get a detailed review of your business, including an approximate value as well as information to help you make improvements.
- Invest in key employees who are well trained and can help carry your business to the next level.
- Create a written strategic plan with your team, which will serve as a roadmap for the future of the business.
Working on increasing the value of your business now will help improve how your business appeals to potential buyers in the future.
A recent article posted on the Transworld Blog entitled “Goodwill When Buying or Selling a Business” explains the importance of a company’s goodwill and how it is determined for a business. Although goodwill is an intangible asset, it’s value can make a company more valuable overall.
Goodwill represents the value of the business beyond its individual tangible assets and is determined by factors such as a company’s brand name & recognition, good employee relations, expectation of future economic benefits, reputation among customers, trade secrets and much more. Assessing a business’s goodwill can help ensure that you don’t overpay on a purchase or sell a company for less than it is worth.