Whether acquiring or selling a Licensed Business, valuations are an essential starting point for making a series of important business decisions.
Often, people don’t want to spend the time or money to have a professional appraisal done. However, trying to save money here is likely to greatly disadvantage you in the end.
In preparation for an appraisal, it may be time to spruce up your business and its financials. Effort spent now could pay dividends down the road. The valuation process reveals and takes into consideration operational strengths and weaknesses, and objective analysis of the company that goes beyond the audited accounts.
The value of a typical small business should be greater than the total values of its tangible assets. A buyer will be looking to see an ongoing business that has everything necessary for them to be successful — equipment, location, and inventory if applicable, not to mention retaining experienced employees, suppliers, business processes, and a customer list — all in place, in the right amounts.
Those intangible assets are frequently referred to as goodwill or going-concern value. But how do you put a price on goodwill or going-concern value? More over, how do you determine the true market value of the hard assets used in your business?
Working to the Institute of Licensed Trade Stock Auditors (ILTSA) Guidelines, Sterling Stock Auditors will carry out a Stock at Valuations (SAV) for change of Ownership – we can work for the Vendor or Purchaser, or we can work for both parties.
What’s more, on the day of transfer we not only check that all stock is of salable quality in line with ILTSA guideline, we will also take all the utility readings and put this on a transfer statement for both parties.
Guessing at the value of your business is more often than not likely to result in a price that’s unrealistically high and turning off potential buyers, or a price that’s unnecessarily low that keeps you from cashing out at full value – you don’t want to risk leaving money on the table!