Business Valuations
Get top dollar when selling your business
If you are thinking of retiring and want to sell your business, you may be in for a rude awakening, unless you’ve done a proper valuation.
What is your business worth? This is a critical question, especially for small business owners because a significant portion of your wealth is tied up in your business.
This is your retirement plan, and the goal is to get the maximum amount for the business.
To completely value the business on earnings and cash flow alone is not accurate. The balance sheet is an important part, along with many other factors to be considered:
- Will the business function without you?
- How closely are your customers and suppliers tied to you?
- Who will run the company when you are gone?
What is business valuation
- Business Valuation is the estimate of an asset or a security's fair market value.
- Fair market value is defined as “the highest price obtainable in an open and unrestricted market between informed and prudent parties acting at arm’s length and under no compulsion to act expressed in terms of money or money’s worth”.
Essentially the estimate of the price that the asset or security would transact at in a notional market.
How to increase value in your business
Many entrepreneurs are tied so closely with their business, they haven’t built anything to sell. You need to start planning for the sale at least five years ahead, allowing you time to put systems and processes in place so the business can function without you.
A proper valuation will not only look at what is driving the value of your business, but will uncover what needs to be done to increase its value.
What a valuation will do for you
Business valuation is a specialized area involving an independent assessment of the fair market value of shares, business operating assets or individual assets of a business. The need for a formal business valuation report can be related to:
- Corporate reorganization or other tax planning opportunities.
- Shareholder agreements.
- Matrimonial disputes.
- Shareholder disputes or other corporate litigation.
- Potential sale or purchase of a business.
- Purchase price allocations and intangible asset impairment testing for financial reporting.
A business valuation can also be used as a tool to assess the success and growth of a business in terms of the value being added on an annual basis.
Our experience
Our experience in business valuation is extensive and extends across a variety of industries including manufacturing, transportation, automotive, wholesalers, professional practices, contractors, agricultural and other specialized service providers.
Valuation is an art, not a science, and requires weighing all factors that affect the business to determine its worth.
The bottom line is getting the most return for all those years of building a successful business.
Contact
Trevor Hood, B.Math., M. Acc., CA, CBV
Principal & Vice-President, Corporate Finance Division
905-633-6353
thood@sbpartners.ca
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What our Clients Say
Michael Andlauer, Chairman, Andlauer Management Group
“Our evolution to a national transportation and logistics group has provided many challenges. Over the last 10 years, the SB Partners team has contributed to our success by offering creative financial and business advice along the way.”