How Business Brokers Help in Valuing Your Business
A business broker is crucial to valuing your business to help you maximize the money you take away when you sell your business. Business brokers use their deep industry knowledge and experience to properly determine the worth of your business, identify potential buyers, and negotiate the best deal for you.
Business brokers can provide a more objective valuation than a business owner because of their understanding of market trends, knowledge of industries, and experience with financial complexities.
Here’s how business brokers can help in valuing your business.
What Is a Business Broker?
A business broker is an individual or business that helps you sell your business. Business brokers, also called intermediaries, act as a bridge, connecting small and medium business owners looking to sell with potential buyers.
Starting with the business valuation, they bring a deep bag of analytical, marketing, and negotiating skills to get you a fair price for your business. A business broker can handle the complexities of a business sale, letting you stay focused on running your business.
What Business Brokers Bring to Business Valuations
Business owners often over- or underestimate how much their company is worth. When selling your business, you want someone with the experience, market knowledge, and objective analysis to produce a realistic and accurate price for your business.
Here’s how business brokers make that happen when selling your business.
Experience and Knowledge
Business brokers have experience in businesses, and they research and understand market conditions, industry trends, and valuation methods to assess the value of your business.
Objective Analysis
While you might be too close to your company, a business broker can remain unbiased to evaluate the positives and negatives of your business. This allows a business broker to give you a fair and transparent valuation, which can lead to a smoother transaction.
Valuation Understanding
Business brokers know businesses and the various ways to evaluate them for sale. A business broker can see that the best valuation method is used to arrive at the true worth of your business. Here are the three most common valuation methods:
Asset-Based Approach: The value of assets minus liabilities
Market-Based Approach: An analysis of comparable sales and more
Income-Based Approach: A projection of future cash flow and earnings
A business broker can use several other methods, including the earnings multiple approach, to evaluate your business, too.
Business Guidance
By delivering an accurate valuation from the beginning, a business broker can help set expectations for the sale, find more value in your company, and identify growth potential.
Business brokers determine a fair market value by assessing tangible and intangible assets, financial records, market conditions, and industry factors.
Working With a Business Broker to Sell Your Business
Small and medium businesses that fail to sell often fall flat because the price is too high. To sell your business, a business broker can help you arrive at a fair and accurate business valuation to attract the potential buyers you want. This can help you reach the closing faster and at the price you want.
