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How to maximise the value of your business before selling

Huberta Neustetter of Bridge Brokers takes you through a four-step process.

When it comes to selling a business, top of any owner's priority list is getting a great price from the right buyer.

Although there is sometimes an element of luck involved in securing a perfect exit, most happy endings are mostly the result of years of careful management and preparation.

Plan ahead

Selling your business should be on your mind from the moment you start it. Invest in new technologies, improve on the management system, find new and inventive opportunities to grow from strength to power, and most important of all: document everything – a paper-trail is worth its weight in gold!

You should plan for two to three years before starting the sales process in order to achieve a well-earned asking price. 

The process of maximising the value of your business consists of four stages:

1. Define your assets

Be clear about what you are selling – any reputable buyer will want to see details of:

Tangible assets: land, property, investments, inventory, vehicles such as trucks or boats, or any other valuables.

Intangible assets: the goodwill.

Fixed assets or capital assets: equipment, land, buildings… whatever is needed to continue with the business. These assets are stated in your balance sheet (costs minus depreciation).

In other words: know exactly what you are selling and how much it is worth.

2. Get your financials in order

Balance sheets, assets, liabilities and taxation should all be in place. Buyers want to know the facts about the business, not only the opportunities it has to offer.

Paperwork is so crucial as it is the ONLY thing that proves your claims in relation to the business's returns. Ultimately this is what is needed if you wish to sell: tangible proof.

3. Maximise the quality of your business

This can be achieved through having good IP (Intellectual Property), a strong location (physical address), keeping the appearance and equipment in good condition. A good looking, clean operation is an attractive one.

4. Explain why the business on is on the market

'Reason for selling?' is one of the important questions a potential buyer will ask.

Be truthful: hiding any skeletons in your company's closet will only cause problems later when the buyer finds them out by themselves. Time and effort will be wasted.

To summarise: plan ahead, have all documentation ready, make sure all assets are in the best condition, present your business truthfully and enthusiastically....and put yourself in the 'buyer's shoes'!

 

Herbert Neustetter is a business broker and co-owner of Bridge Business Brokers in Johannesburg.

Ready to sell? You are just 10 minutes away from advertising your business to 1.3 million prospective buyers. Sell your business today.



Huberta Neustetter

About the author

Huberta Neustetter is co-owner of Bridge Brokers, a fast-growing, full–service business brokerage company, which provides clients with a thorough and committed service by assisting in all the aspects of the transaction and legal documentation.

@hubertaa

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