It's a Living Asset!

Well, the monster in the attic is not from some old horror movie-it’s your business!

While many business brokers and tax advisors think of your business as the sum total of your “Available Free Cash Flow”, you know it is very much more than that! Your closely held business is a living asset. It often sums up what you do most every day and how you do it.

It’s about your plans for your family, your key people, your vendor relationships and agreements, your sales process and your back office. And of course, it’s about your clients and everything you do for them. The over-the-top service you provide. The value-adds you cannot quantify as a line item on your Income and Expense Statement. It’s what makes your clients raving fans.

Your business is a Living Asset! Some call this “Goodwill”-and it is. Some call this Intellectual Property”. And it is.

So when you want to sell your business, why discount it at the market price of your fixed assets, inventory and equipment? Since you can amortize goodwill, this living asset, your business, clearly has excess value.

And how do you maximize this value and sell for the highest price? You will have to address the following points:

What is your business worth? If you price your business too high, you'll scare away buyers. If you price it too low, you'll lose out. A valuation must blend the hard facts, the financials, with the qualitative components of your enterprise: goodwill, your client relationships, reputation, and trademarks.

What about the taxman? Taxes can take a huge bite out of the money you receive for your business. In order to structure a sale, it pays to know just how big that tax bite will be. And then try to lower it, most likely with help from a CFP® or other advisor.

Looking your best. The getting-ready process includes not only sprucing up your premises, but getting your numbers and systems in good shape. Your systems, policies and procedures might even be described in a manual, a sort of “Users Guide’ for a prospective purchaser.

Seek Potential Buyers. Know what type of transaction structure will be suitable, and where and how your buyer might be financed. This is where a good business broker can market and promote your business to a broad network. And, remember that while confidentiality is of upmost importance, so too is qualifying a purchaser. Your broker should evaluate a potential buyer to determine whether he has the necessary background, skills and financial clout to bring an offer to close.

Ken Stein, CFP®
Business Broker and Intermediary
www.linkedin.com/in/kennethsteincfp
www.gotoimpact.com