Business Brokers NJ: Article About The Right Price For Your Business
Price is the most important aspect of a business sale to both the buyer and the seller. The buyer doesn't want to pay too much and the seller doesn't want to sell for too little. Because of this, sellers are at risk of either overpricing or under pricing their business. Overpricing happens when a seller think they're business is worth more than it is, or when they're determined to walk away with a certain amount of profit. Under pricing happens when the sale needs to happen quickly and the seller is afraid that if the price is too high they'll have to sit on the listing for years before a buyer comes along. To avoid wrongly pricing your business, you should work with a business broker who has experience valuing businesses and analyzing markets to get you the right price.
The best way to insure you're asking the right price is to have one of our business brokers NJ perform a professional valuation. There are a number of methodologies used in business valuations, and your broker will know which method is best to make your business look promising. The broker will look at your net income, expenses, tangible and intangible assets and your company's goodwill when determining price. He or she will also perform market research to analyze comparable sale prices of similar businesses that have recently sold and those that are currently on the market.
Price is also affected by your financing terms. If you want all cash, you may not get offers as high as you'd like. If you're willing to offer seller financing or pre-qualify your business for an SBA loan, buyers are more willing to pay your asking price or close to it. Sellers who are willing to accept down payments and lender financing are in a better position to ask a fair market value and efficiently close the sale.
Have a question regarding corporate advisory services or business sales? Please ask the business brokers from Selby Associates of Cherry Hill NJ today.
If your accounting books aren't organized you may never get a bank to agree to finance a buyer. Your broker can help you recast your financial statements and reorganize your books so that your business looks clean and organized to the lending institutions. Any unreported income will need to be handled and no future income can go unreported. Tax papers must be in order and all of your tax matters must be handled before attempting to sell your business. Your broker can work with your company's accountant to fix any financial mistakes and get your business listed.
Whenever the economy takes a downturn, lending institutions start tightening their belts and being very selective about who receives a loan. Even buyers who could have gotten a loan previously may be denied for small reasons, putting your deal at risk of being dropped. Business investors are aware that when credit crunches happen banks aren't necessarily the place to receive lending. Buyers will start to look to seller financing as a means to finance the deal. Your broker can help you figure out the seller financing options available so that both you and the buyer end up with a good deal.
Another alternative is to become pre-qualified to accept SBA loans from buyers. This will help the transaction move smoothly since the SBA knows that your business is safe to provide a loan for and all that's needed is approval of the buyer. Suggest that buyers utilize the SBA loans. As long as you organize all of your financing strategies with your broker, you shouldn't lose a deal to lack of funds.