Business Tactical

How to calculate a business worth for selling it?

There are a lot of individuals that look forward to selling a company. The reasons for putting up your business for sale can vary a great deal so we won’t go into the details of it. If you have tried to sell a business or a product at any stage, one of the toughest thing you will ever find is pricing it appropriately. Especially, when it comes to selling a business, many individuals find themselves stuck with how to calculate a business worth for selling it. So, let’s take a peek into simple ways that will help you in determining the right value for your business.

Types of assets and liabilities

One of the first thing you need to know is about the types of assets and liabilities. There are various assets that come into play for a business when we talk about determining its worth. Generally, the assets are categorized into two sections, tangible and intangible. The tangible assets are the ones that can be dealt with fairly quickly such as the equipment, machinery, inventory, and other investments and receivables. These are the things that can be sold or disposed pretty quickly.

On the other hand, there are intangible assets. These are the goodwill, trademarks, logos, recipes and processes, and similar other assets that can provide more value to the business or the buyer who is going to purchase it.

Also, you need to consider the liabilities which include the payables, mortgage, contracts and loans, debts and leases, etc.

Valuing the company quickly

In order to have a quick look at the value of your company, you might take a look at its balance sheet. The balance sheet of a business is of great importance and can reveal many things about it. An estimation of the value can come from the balance sheet too.

Start by looking at the balance sheet. It will tell you the tangible and intangible assets. Moreover, the long-term liabilities are also there for you to consider. A valuable tip for you is to terminate some of the liabilities and agreements as soon as possible to lower the liabilities and increase value of your business.

For those of you that possess a complex balance sheet, here is a simpler formula. Consider the assets that are tangible and can be sold quickly. These potentially good and valuable items provide worth to your company. Now, take a look at your balance sheet for liabilities and subtract them from the overall value of the goods that you can sell in no time. It is a fast way of calculating the worth of a business but might be inappropriate for you.

What else?

There are a number of other methods too that you might come across when searching for how to calculate a business worth for selling it. A common way is to use the earnings multiplication method and you might find some calculators for it too. Moreover, you can also consider the competing companies like CBC Business brokers sydney to calculate their average sales to determine the worth of a company.

 

 

Author

Ian Bailey