When selling your business, getting a ballpark value is the first step toward getting a fair price. But who should advise you on an asking price?
If you’re looking to sell your business you will want to get an appraisal. This will allow you to know how much your business is worth, giving you’re a base line for what you can ask. Finding the right person to value your business is the first step toward getting an accurate dollar amount.
Pros and Cons of Accountants
Accountants can take an inventory of all your company’s assets, credits and debits to provide you with a dollar amount that your entire business is worth. Some things to consider when hiring an accountant to value your business include:
· Some accountants specialize in valuing a business for sale. This is your best bet when hiring an accountant for this purpose, just as hiring an accountant who specializes in taxes is your best bet for getting your taxes done accurately.
· An accountant will generally evaluate your business on the basis of its value on paper. This will tell you little about the value of your business as a gestalt, i.e. “more than the sum of its parts.”
· Accountants will have knowledge that other appraising agents probably will not, such as the tax consequences of selling your business for the appraised value.
The short answer is that an accountant is a good way to do due diligence and verify the income of your business. There are, however, professionals who are better at providing you with the market value of your business. This does not mean that you shouldn’t employ an accountant. It merely means that an accountant is just one type of consultant you should utilize when valuing your businesses for sale.
Other Ways to Value Your Business
There are many other professionals who can value your business for sale. Combining their expertise with that of an accountant will ensure that you are able to get the fullest picture possible of your business’s actual worth.
· Certified Business Appraisers: These are professionals who specialize in appraising the market value of a business. The Institute of Business Appraisers, a professional organization for the trade, certifies them. CBAs must have a college degree, complete specialized training and a written examination and be a member of the IBA. Recertification is required every two years, with 24 hours of training required as a part of this process.
· Business Brokers: Business brokers are professionals who deal every day with buying and selling businesses. In addition to providing a selling price point for your business, a business broker can help you find a buyer, as well as market the business and screen out potentially unserious buyers.
Choosing Your Consulting Team
You should hire the best consulting team that you can afford. This might include an accountant, certified business appraiser, business broker or some combination of the three. A lawyer is another prudent consultant to have on retainer when you are in the process of selling a business. If you are only able to hire a single consultant, consider the cost of the different trades against the services they can provide to you.