You have been building to sell your business that you’ve put a lot of time, effort, and equity into growing, and now you’re looking to sell. Your objective is to get maximum value when selling and you’re assessing steps to prepare for the sale. You are trying to get the maximum price for selling your business, getting the best terms and finding the right buyer or looking for the best broker to sell your business. Either way, There are a series of steps that you can take to maximize the price at close.
WE ANALYZED 14,117 BUSINESS SALES: HERE’S WHAT WE FOUND
Let’s get right into it.
For example, a business that is doing $300,000 in profit per year sold for at 2.44X would have a sale price of $732,000 ($300,000*2.44=$732,000). This works in reverse as well — if a business sold for $732,000 at 2.44X, then ($732,000/2.44) means the profit was $300,000.
So, when we say that a business was sold for a multiple of 2.44X, for example, it means that the amount paid for the business is a value of 2.44 times the profit.
You will see the term ‘multiple’ used a lot. A multiple can be applied to a number of financial metrics in a business (such as EBITDA, net earnings, gross revenue etc.) to determine how much the business will be worth at sale. We calculate the multiple for the business in question based on profit, using SDE — seller’s discretionary earnings for business.
We purchase the last 5 years sales data and analysed over 14,117 transactions between $50,000 and $100million. As you can see from the graph above we found some interesting things:
WHAT TO PREPARE FOR SELLING YOUR BUSINESS
General information consists of the regular information and is usually the first thing potential buyers will be looking at if they are interested in your business Here is a short list of some of the things you will be expected to have ready:
- Fact summary sheet, gives the most important information about the site all on one page
- Programs that the site uses and how to work those specific programs
- Security reports
- Index of every single page
- Media mentions, such as awards or publicity
- List of employees
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