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6 Key Ways a Business Valuation Shapes an Informed Sale

6 Key Ways a Business Valuation Shapes an Informed Sale

Whether it is a matter of moving towards other profitable ventures or simply cashing in your lifelong investment, successfully putting your business on the market in Toronto and leveraging it into a prime acquisition depends largely on its worth. Selling your business to an external third party begins with a professional company valuation which informs your next steps, such as further enhancing its value and creating an opportunity to sell for a significant premium.

By undertaking the right steps in preparing for the sale of your business, you can be well ahead of the market as many business owners avoid pre-sale planning and skip essentials such as proper preparation which starts with a business valuation. This can result in gross over or underestimation of how much their business is worth, causing them to miss out on selling their business at the maximum possible price.

Here are six ways a business valuation can help avoid an undesirable (or no) outcome, protect your future, and maximize the gains from the sale of your company:

Manage Pricing Expectations

With a business valuation, you can better manage pricing expectations and allow shareholders to agree on a selling price based on what the company is really worth in the market. Understanding value well ahead of a potential sale increases the likelihood of a successful deal with the satisfaction that no money was “left on the table”.  

Justify Asking Price

Armed with a professionally prepared company valuation report, you are able to justify the asking price and negotiate a fair, well-informed deal with a potential purchaser at market value. As a business valuation indicates how much your business is worth, you will be assured that you are putting your business on the market for the right price to maximize the proceeds realized in the sale.

Navigate Unsolicited Offers

When your business goes up for sale in the market, you will likely receive acquisition offers, even unsolicited ones from competitors and other industry participants in Toronto. Without a business valuation, it can become easy to sell to an industry peer under the assumption that, because you operate in the same industry, they already have a good idea of how much your company is worth.

While this path sounds simple, following it may not result in selling your business for how much it is really worth. The absence of a company valuation can present your industry peers an opportunity to shortchange you, allowing them to acquire your business for far less than its market value. On the other hand, a sale process that starts with a company valuation prepares you for unsolicited offers and equips you with key information for negotiating a fair, market-value price for the sale of your business, even if it is to industry peers.

Identify Potential Purchasers

Having a company valuation may alert you to potential purchasers you did not consider.  You can also identify if the interested party can put up the cash or if alternate deal terms may be sought by the potential purchaser. You can also limit negotiations to those who understand the value of your business in the market and have the resources to successfully acquire it.

An Informed Business Value

A comprehensive, professional company valuation report keeps you well-informed regarding various nuances, such as “stand-alone value”, “synergistic value”, as well as the notion that strategic purchasers are often willing to pay more than the “stand-alone value”, and how each of these determine the sale of your business. A business valuation can address all these factors for you, equipping you with all the facts crucial to facilitating a successful sale.

Maximize Sale Price

Ultimately, the goal of obtaining an independent, professional business valuation all boils down to maximizing the value of your business and ensuring that it is sold for the best possible price. This ensures that no money is left on the table, your future or next ventures are kept secure, and your business will be able to command the right place relative to its position in the market and economic trends.

At the end of the day, what separates a successful sale from a discounted acquisition can be a simple, but frequently overlooked business valuation. By knowing how much your business is worth, not only can you be rewarded for nurturing its growth over the years; you can also be privy to ways you can further drive its value through initiatives you can undertake well before its debut in the market, resulting in a successful sale.

Reap the rewards of nurturing the growth of your business in Toronto. Realize maximum gains, as indicated by a selling price that makes it a prime acquisition in the market. Start with a business valuation for an informed sale.