The first step before you sell your business is to obtain a proper business evaluation.  At Five Star Business Brokers of South Florida, we offer all future clients a FREE business evaluation.

The most important aspect of the business evaluation process is looking at your financials. This usually involves tax returns or profit and loss reports (typically going back three years if possible).  Many sellers do not realize that there are ‘hidden’ profits contained in their financials. These ‘hidden’ profits can be in the form of non-cash expenses, owner salaries, one-time non-recurring costs, and any personal expenses that are run through the business.  A careful and thorough analysis of your financials is the first crucial step. 

Next, we will discuss and evaluate the physical assets of your business. This includes leasehold improvements, equipment, and inventory (defined as items saleable to the public). The age and condition of the physical assets need to be examined in order to depict an accurate representation of the current depreciated value of the physical assets.

Then comes the hard part…Analyzing this information and coming up with a fair asking price that will reflect the true value of your business.  Typically, businesses sell for a ‘multiple’ of the profits or what is called the ‘owner benefit’ (reflecting all the ‘hidden profits’) plus some value allocated for the physical assets. Many other factors are examined in order to determine this ‘multiple.’ These other factors include the length of time you have been in business, the trajectory of sales and profits over the last several years, the net margins of the business, the location of the business (for retail), and how involved the owner is in the business (the less involved the higher the multiple). Of course, examining industry standards and comparisons to similarly sold businesses is also closely scrutinized.

In short, evaluating your business is the first and most important step in selling your business. Setting the price too low or too high is a dangerous mistake that many other brokers unfortunately make for their clients.  At Five Star Business Brokers of South Florida, our business is selling businesses and we get the job done right the first time!

Please contact us today for a FREE business evaluation.

Located in Palm Beach County, Florida, Five Star Business Brokers proudly transacts business sales throughout the areas of West Palm Beach, Lake Worth, Palm Beach Gardens, Boca Raton, Jupiter, Delray Beach, Boynton Beach, Wellington, Palm Beach, Royal Palm Beach, and Riviera Beach.