Mistake #1: Trying to do your valuation by yourself

Determining the value of a company is a complicated, involved process, and trying to value your business alone will certainly result in missed details. Nobody understands the business sales market better than an experienced business broker. One can help you determine a fair market value for your business, or even suggest ways to increase the value! Using a commercial business broker for the sale of your business allows you and your management team to maintain 100% focus on your company, so that it remains profitable and is appealing to potential buyers.  Compare this with a real estate broker who knows what houses are worth in a certain market and what the market in general is like at a given point in time. The insights of a business broker are invaluable.

Mistake #2: Unrealistic Projections

 This is one of the most common mistakes made when selling a business. As a business owner, you most likely have high expectations when it comes to the value of your company. This can be for many reasons, such as unrealistic expectations for growth and cashflow, a poor understanding of the target buyer, or maybe you just don’t understand how businesses are valued. That’s okay, this is why you hire an expert! A seasoned business broker can help you manage your expectations and help you to arrive at a fair market value for your business.

Mistake # 3: Comparing your business to others!

 While finding a comparable competitor’s business may help with the value of your company, it can be tricky to find a business that is truly comparable. It is important to consider hidden factors such as reputation, intellectual property and patents, customer portfolio, plus management experience and many other factors within that company. The age and growth phase of a business is also a factor when it comes to value. A younger, evolving business is likely to have a lower value than an established business with comparable cashflow. Your business is unique, your circumstances are unique, and there are more accurate and proven methodologies to evaluate your business without trying to compare yourself to others!

Mistake #4: Not defining EXACTLY what is for sale

In the valuation of a business for sale in Manitoba, it is very important to define exactly what is being offered for sale. A lack of clarity in this area can lead to confused buyers, who are not sure what they would be getting if they bought your business. You will need to determine whether the assets or shares are being sold. You will also need to consider many other factors, including company debt, inventory value, working capital, surplus property or assets that are held within the company, capital gains exposure, and on and on…. It is important to determine exactly what you are going to sell and what will be held back before valuing your business.

Mistake #5: Expecting a fixed value

Valuation of a business is not an exact science. A common misconception is that valuation will provide an exact value, but there is no one magic number that everyone in the market will accept. Your business broker will provide you with a price range that the company is likely to sell for, but it is not uncommon for this figure to be different than the final transaction price, and it is important to understand that there may be some variation in price throughout the sale process. A good business broker will source a number of interested buyers, and this will increase the likelihood of realizing maximum value on the sale of your business.

Your business broker can help you through every step of the valuation process, and will often value a business via several different models, to provide you with the most accurate valuation! Ready to get started?  Contact us today!