Around the Web: A Week in Summary
A recent article from Cobb Business Journal entitled “Is cash king when selling a business?” discusses the benefits and risks of accepting a low cash offer versus an earnout structured deal with a higher end payout.
When presented with both of these options, many business owners would ask, “Which offer is the best offer?” According to a financial professional, the answer is “It depends”. The business owner needs to consider their needs and future goals as well as the risk factors involved in accepting either offer. Cash deals are a rare occurrence, but have the potential to leave money on the table. In the same turn, an earnout structure can make you more money but leaves some of your wealth and time tied up in the company.
The best response to receiving multiple offers that vary like this is to contact an advisor. A trained advisor will be able to sit down with you and weigh the needs of your particular situation in order to assist you in making the best decision for you.
A recent article from Wilmington Biz entitled “What You May Get Wrong About Business Valuations” explains the importance of investing in a proper business valuation.
Business owners commonly misinterpret the present value of their business. Oftentimes they will hear about or see another company that they deem similar to theirs sell at a particular price and assume that their business is also worth the same. Or comparably, entrepreneurs will assume that because their company is large, bringing in commendable revenues or outwardly successful, that it’s of high value to a buyer. The reality is that there are many factors that impact the value of a business that most owners wouldn’t know to consider.
Some may be turned off by the initial investment of receiving a valuation because of this belief that they already know their company’s worth. However, a valuation is an incredibly valuable tool. Not only does knowing the value of your business give you leverage in negotiations, it also gives you insight into your business. The pillars of a valuation allow an owner to pinpoint areas for potential growth before listing, giving them the ability to list at a higher price.
A recent article from The Irish Times entitled “Family business: to sell or not to sell? 6 questions to help you make the right decision” explores important considerations for business owners to entertain before making the decision to sell.
There are many options for exiting your business. While some owners begin their business with the intention of selling it eventually, plenty of others never plan on selling. For many family owned businesses, there’s an expectation that the business will passed on through the generations. Regardless of how you decide to sell, consider these important questions before you do:
- Is now a good time to sell?
- How much is my business worth?
- What are my non-negotiables?
- What will I do next?
- Have I done my purchaser diligence?
- Who will act as the negotiator?
Choosing whether or not to sell a family business is a major decision. Answering these questions thoroughly before you make your decision will help you make the best decision for your future.
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