Business Appraisal for Selling a Business

Business Appraisal for Selling a Business

When selling a business, be smart in the price you sell for. The price you list your business at will make a difference in the number of potential buyers and whether your business sells. You don’t want to overprice your business or sell for less than it is worth. A business appraisal can help you be sure you get a fair price for your business. In this article, we discuss the importance of a business appraisal for selling your business. 

What is a Business Appraisal

A business appraisal is a report of your company’s total worth. An appraisal is part of the valuation report. This valuation takes into account debt, cash flow, taxes, assets, industry, and more. It even forecasts what your business should look like in the following years. This appraisal details the value of your business and the valuation methods the appraiser uses to find their results. Business appraisals are used for many purposes. For this article, we will discuss the purpose of a business appraisal when selling a business. 

Knowing the Value of Your Business

On average, it takes anywhere from eight to ten months to sell a business. Potential buyers usually end up walking over price so it is very important that you price your business properly. Receiving a business appraisal will help you set a fair purchase price for you and the buyer. And, it will hopefully shorten the time it takes to sell your business.

Knowing the value of your business is a key ingredient to selling your business. Appraisals are a great way to evaluate the status of your business and understand your company’s worth. A business valuation is very helpful when negotiating a purchase price. It will give you the best idea of how a buyer views your company and its strengths and weaknesses. It is also helpful when preparing to sell your business as you can use it as a tool to maximize the value of your company. 

When getting a business appraisal for selling a business, it is best to get a third-party business appraiser. Peak Business Valuation provides business appraisals for several individuals each week who are selling their business. We are happy to answer any questions you may have. Peak is one of the leading business appraisers in the country, valuing businesses from $1 million to $10 million. If we aren’t the right fit for your business, we will be happy to point you in the right direction of someone who is. Schedule a free consultation using the link below.

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Why You Need a Business Appraisal

While many business owners don’t want to spend the money on a business appraisal, it is often more costly not to. Individuals interested in buying your business will often obtain their own business valuation. They will look at the state of your business as a whole, how your cash flows look, the expected revenue in the following years, and where there can be growth. That last part is very important to a potential business owner. If a company cannot grow, it is not valuable.  

A third-party appraisal business looks at the facts and not the opinions. It is a trusted way to see the statistics, figures, and value of your business in an unbiased form. A business appraisal is helpful for both the seller of the business and a potential buyer. Be sure to use a trusted and credentialed business appraiser such as Peak Business Valuation. Schedule a free consultation.

What a Business Appraisal Looks Like

There are several key ingredients to a business appraisal report. We list several of the most important pieces of a business valuation report below:

  1. Cover Page
  2. Executive Summary
  3. Company Overview
  4. Economic and Industry Trends
  5. Financial Analysis
  6. Valuation Approaches and Methods Used
  7. Discounts and Other Considerations
  8. Appraisal Conclusion
  9. Appendices and Schedules 

For more information on business appraisal reports, check out Business Valuation Report Made Simple.

Each section of this report covers an important piece of the puzzle. The analyst doing the valuation will spend significant time detailing the ins and outs of your business. Having this appraisal completed will give you an edge when negotiating with potential buyers.

Oftentimes, a buyer uses an SBA loan to finance the business purchase. If the loan is greater than $250,000 the lender requires a third-party SBA business appraisal to be done. The appraisal will need to be done on your business’s behalf for the loan to go through. 

Summary

Knowing the worth of your business will help you navigate the process of selling your business. It can also help you get the most money out of your business. And, if you are preparing to sell a business, a business appraisal can help you maximize the value. Do not do a business valuation yourself. Seek a trusted professional to provide you with unbiased information on the value of your business. Potential buyers will almost always request a business appraisal before buying a business. A business appraisal can help you be a more confident and knowledgeable seller of your business.

Peak Business Valuation is a leading business appraiser in the country. Our purpose is to provide accurate and unbiased information to individuals looking to sell their businesses. Get started with your business appraisal for selling your business today by scheduling a free consultation.

 

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