Once you have decided to sell and have determined
that the timing is right, you need to look at both financial
and qualitative factors :
Financial Statements
- Financial statements tell a prospective buyer where the business
has been. The statement should review profit and loss history,
balance sheet and source and application of funds.
First review your past financial statements
to determine the value of assts and the consistency and quality
of earnings. You'll need to make adjustments to the reported
earnings that would result in a higher net income for a new
owner. This is called reconstructing the financial statements,
which gives a prospective buyer a better picture of where the
condition of the company is, and it's future potential for success.
Qualitative Factors
All of your assets are not shown on the balance sheet. There
are a number of qualitative factors which are considered assets
of your business :
Breadth and depth of you client / customer base.
The ability to sell both current and additional product to those
customers who have been satisfied with product and service.
Marketplace reputation among customers, suppliers
and competitors. Is the company looked upon as an industry leader
or a follower?
The value of patents and proprietary processes
which have not been commercially developed to date.
Your product's potential growth and aniticipated
competition.
Strengths and flexibility in responding to market
changes. Do you have the ability to manage the business in the
changing environment?
Saleability is greatly increased if your organization's
management team will be left in place to continue with the business.
A company dominated by one person is usually of lesser value,
while the involvement of more people, i.e. a team, with less
reliance on one individual is a major strength.
