Conform to the market not the other way around? |
Unlike the real estate market, which is supported by a formal mechanism for determining values, the market for small businesses in Australia is highly fragmented, and heavily influenced by a number of internal and external factors. Rarely are two businesses alike. And even if they were, there is no public repository or titles office of information where selling prices and terms are recorded. Otherwise, anyone could access this data to make comparisons and determine a proper, comparable, value for a business. A successful sales strategy in this environment begins with a determination of what buyers are seeking, and then making sure that what you have to offer conforms to those requirements. This is particularly applicable in the case of price and terms, but also when it comes to training, covenant not to compete and some of the other particulars of a sale, as will be explored in future articles. The best way to find out what multiples of earnings to apply in arriving at a price for a business like yours, or what valuation approaches are used to assess business assets, is to discuss this with a business broker or agent. Or you can consult with a business valuer familiar with valuing small businesses in Australia. And a second opinion is helpful. With information about the value of your business, given current market conditions, you are prepared to bring to market an offering that reflects today’s realities. Be forthcoming with needed information For many owners who’ve developed the habit of maintaining some secrecy about business affairs, it would be easier to give up a couple of teeth rather than share with others the details about their operations. Perhaps this describes you. Naturally, it’s important to limit exposure of the company to those prospective buyers. |