Business Brokers - Sell Business - Business Sales and Acquisitions - SunbeltNE

‘Getting to the Heart of Business Valuation -5 part Series’ helps you grasp the core fundamentals of business valuation procedure. Areas covered were selecting the right business valuator, types of business valuation, checklists of documents and information to keep ready for business valuation and finally we discussed the business valuation process.

We conclude this mini 5 part series, with this last topic which highlights essential tips to increase value of business to ensure business sale is favorable.

Check out the following healthy signs, and then listen to the heartbeat of your own business and its leadership style:

Optimistic Attitude

Many business owners today are more pragmatic and take pride in being less of an “incurable optimist.” In a world driven by technology and scientific analysis, it’s easy to forget the importance of the right attitude. If business owners aren’t positive, how can they expect customers and employers to be? The owner who believes business is bad will probably not see it getting any better.

How to project a positive attitude? Begin with the easiest. Sprucing up the place of business with fresh paint, newly-cleaned carpeting, well-stocked shelves, for example, will say a lot for the health of a company. Less visible, but highly important, is a positive outlook on the future of the business. Business owners should be prepared to spend what it takes to generate new business, and should take the time to outline new possibilities for long-range success. If the company currently has no mission statement or business plan, creating one will speak volumes about owner’s enthusiasm for the future of the operation. This will make the overall profile very attractive to prospective business buyers.

Healthy Managerial Style

In the modern workplace, where you can hardly see the business through the forest of “managers,” it’s good to get back to basics. Too often owners get bogged down in busy work, or in “managing the managers.” Owners who put themselves in the trenches are in touch with the business -- and this first-hand understanding will be evident to anyone taking stock of the company’s worth.

An equally healthy approach to managing is preparing for contingencies. The owner’s style should include appropriate delegation of duties and a backup managerial plan in case of unforeseen calamity.

And finally, owners should project a general sense of well-being and energy. Give valid reasons to make a killing at the negotiation table and sell a business at good price by showing futuristic opportunities to grow. Anyone taking stock of a business will draw a quick impression from the very posture and tone of voice the owner presents.

Conspicuous Image

To foster the image of an on-going, healthy business concern, business owners need to keep their image prominent before the public. Advertising can build image at the same time it attracts business. Anything from a display ad within the yellow pages listings, to a monthly company newsletter, to the offering free seminars, can portray the business as more than just the sum of its products.

Community Involvement

To further promote the business -- and its owner -- as a rock-solid and permanent part of the local scene, there are opportunities just waiting to be tapped. Taking an active role in the Chamber of Commerce, trade or service associations, and sponsorship of worthy local events is great public relations.

To find the real value of a business, go to its very heart: the attitude, work habits, managerial style, customer/marketplace savvy, and community reputation of the person in charge. The business owner or manager is the final, and most cogent, indicator of business worth.

Dollars and cents will always be important in establishing value, but it’s a kind of people-sense that will give the truest meaning for business value. Establish value for your business in truest sense and see the market value soar and overall win-win situation while selling business!

After tackling issues like how to select the right business evaluator and understanding the various methods of a business valuation, and checklist of documents to be kept ready, this post will talk about the business valuation process adopted by SunbeltNE business brokers. Adopting a right business valuation process ensures the sale of business will bring in a better sale price compared to arbitrary valuation of business.

Step 1: The Broker meets with the client to determine what type of valuation is required.

Step 2: During the meeting, the Broker will assist in the completion of the Company Profile information needed for the type of valuation selected.

Step 3: Once the Company Profile has been completed and the required financial, company and other general documents and information are obtained, the package of information is mailed, faxed, or emailed to third party Valuation Analyst.

Step 4: The Valuation Analyst will review the documents and begin the valuation. During this process, if the Analyst has any questions or requires additional information, he will contact the Broker to obtain them.

Step 5: The valuation process for a Snapshot, Value Analysis, or Limited Formal will be taken with the help of required financial information. A completed Company Profile is then generated, and all questions that arise are answered. The Mergers and Acquisitions and all Comprehensive reports will take time due to the complexity of the valuation.

Step 6: The Analyst will issue a preliminary review of the valuation. This review is critical to the final report. It assures that all details have been considered and allows for any adjustments that may need to be made based on new information or further clarifications.

Step 7: Once the review with the Broker has been conducted, the Analyst will finalize, print, and send the final valuation report.

Step 8: The Broker will receive hard copies and an electronic copy (if requested) of the final report. This report is sent to the business seller/owner. Thus a planned business valuation involves lot of procedures and systematic planning to ensure the right value is found out to help sell business.

To know more information about SunbeltNE’s business valuation services.

Previous posts took you through a quick overview of how you can select the right business valuation professional, the various methods of business valuation to begin your planned exit strategy to sell a business.

Let us proceed to have a quick review of the documents and information to be kept ready to conduct a thorough and fair valuation of the business. Also note that all these information will also help the business buyer to conduct due diligence and make the process of selling a business quick and smooth.

Following is a checklist of documents and information that professional business advisors ask prior business valuation:

Financial Statements:

• Balance sheets, income statements, statements of changes in financial position, and statements of stockholders’ equity or partners’ capital accounts for up to the last five fiscal years, if available.
• Income tax returns for the same number of years.
• Latest interim statements if valuation date is 90 days or more beyond end of last fiscal year and interim statement for the comparable period the year before.
• Prepare a list of subsidiaries and/or financial interests in other companies (if any) along with relevant financial statements of such a company.
• Equipment list and depreciation schedule.
• Aged accounts receivable list.
• Aged accounts payable list.
• List of prepaid expenses.
• Inventory list, with any necessary information on inventory accounting policies (including work in progress, if applicable).
• Lease or leases (if lease does not exist or is not transferable, determine what new lease or rental terms will be).
• Any other existing contracts (employment agreements, covenants not to compete, supplier and franchise agreements, customer agreements, royalty agreements, equipment lease or rental contracts, loan agreements, labor contracts, employee benefit plans, etc.
• List of stockholders or partners, with number of shares owned by each or percentage of each partner’s interest in earnings and capital.
• Compensation schedule for owners, including all benefits and personal expenses.
• Schedule of insurance in force (key-man life, property and casualty, liability).
• Budgets or projections, if available.

• If a Corporation, articles of incorporation, by-laws, any amendments to either, and corporate minutes.
• If a Partnership, articles of partnership, with any amendments.
• List of existing buy/sell agreements, options to purchase stock or partnership interest, or rights of first refusal.

• Brief history and details of any changes in ownership and/or bona-fide offers received.
• Brief description of business which includes position as compared to competitors and any factors that make the business unique.
• Marketing literature (catalogs, brochures, advertisements, etc.)
• List of locations where company operates, with details provided in terms of size, and whether owned or leased.
• List of states in which the company is licensed to do business.
• If customer or supplier base is concentrated, list of major accounts, with annual dollar volume for each.
• List of competitors, with location, relative size, and any other relevant factors.
• Resumes of, or list of, key personnel, with age, position, compensation, length of service, education and prior experience.
• List of memberships with Trade associations or would be eligible for membership.
• Information of relevant trade or government publications which features the company.
• Collect existing indicators of asset values, including latest property tax assessments and any appraisals that have been done.
• List of patents, copyrights, trademarks, and other intangible assets.
• Any contingent or off-balance-sheet assets or liabilities (pending lawsuits, compliance requirements, warranty or other product liability, etc.)
• List of any filings or correspondence with regulatory agencies regarding issues related to business.
• List out major highlights of prior business transactions.