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Goodwill is the difference between the total value of the business and the value of inventory, equipment, vehicles and any other “hard” assets. Every business has goodwill, unless it is closed down or failing badly. The amount you pay for goodwill will depend on the cash flow of the business and its general attractiveness. If buyers didn’t pay for goodwill, sellers might as well sell off their equipment and close down rather than sell as on-going business.
We analyze the cash flow of each business to put it on an even footing with every business, no matter how the owner takes the profits out of the business. We usually define cash flow as profit before income tax,
depreciation, interest and owner compensation and benefits. This is the amount of money the owner has available to pay himself, to invest in additional equipment, to make the note payments on the business and to pay taxes.
The accepted (American Institute of Real Estate Appraisers) definition of FAIR MARKET VALUE is: “ The highest price which a business will bring if exposed for sale in the open market, allowing a reasonable time to find a purchaser who buys with full knowledge of all its uses.” Another way of putting it would be “the price a willing buyer will pay and a willing seller will accept, with neither party acting under pressure”.
Price is negotiation but if the business can earn you the income you want and make the note payments, then it’s worth the price.
Usually you can take a tax deduction for depreciation on the fair market value of all the furniture, fixtures, and equipment at a much faster rate than real estate. The Covenant Not to Compete and the value of training are
tax deductible, frequently at high levels. Finally, most businesses have deductible expenses that add to the owner’s cash flow.
The best time to sell is when a business is doing well. It’s best not to wait until after a business has peaked; the selling price can suffer. However, almost any business can be sold, even if it is not doing too well, if the sale is handled correctly.
A company value depends on many factors – such as cash flow, asset values, financial history, condition of equipment and premises, lease attractiveness, risk, competition, potential growth, location, industry type & the economy, among others.
We have unparalleled knowledge of market values. By analyzing a business and its industry we can advise in proper pricing strategies.
Well, while many business brokers are licensed to sell real estate, most residential agents do not know how to sell a business. The techniques of pricing, selling and putting together the business transaction are altogether different from selling houses.
It’s virtually impossible for a real estate agent to get the confidential exposure to qualified buyers that major business brokerage specialists can.
There are no up front fee or costs. The marketing fee is paid only if the business sells. Most sellers have found that the cost of using our services is more than offset by the value they have gained from our expertise and
access to buyers.
Most owners find that the frustration, expense and time involved do not yield cost savings. In fact, because they don’t have access to a large number of qualified buyers, many owners end up selling their business for much less than they could have through a well established business broker. And, owners find it difficult to work directly with buyers and maintain confidentiality. If a key employee or competitor learns the business is for sale, the value of the business could be damaged. Selling a business is a specialized function.
We have developed a proven system for selling businesses. You may be able to find other business brokers, but no one can offer you the full service advantages of SBR.
Exposure
SBR your Complete Business Resource.
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