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Methods for Selling a Business

When you have a business that you're wanting to sell, do you really know what is required of you? How do you really know you're ready? Is it something you've thought through and have prepared yourself for? Selling a business is a different caliber of selling, and there are so many details to consider. While you may think it is just a simple task, it's so much more than that. There are a lot of things that you should be thinking about, and one of the very first is the possible methods for selling a business.

Methods for Selling a BusinessYes, there are a variety of methods you can take when you are ready to sell your business. Do you know which method you're going to use when it comes time for you to sell? If you don't know about the various methods, we'll discuss some of them for you so you can make an informed decision.

Market-Based Method

With this approach, you would look at other businesses in the same or in a similar industry as your business. You'll look at those that have been sold; you want to get an average of other businesses and base your selling price from there. Using this method is a risk… you may not be able to get the true value of your business.

Asset-Based Method

With this approach, you are assessing the price of the business based on the fair market value by looking at the individual assets. One thing you have to keep in mind about this method is that it doesn't adequately account for the intangible assets your business has… this includes the goodwill of your business as well as the future revenue that has been forecasted for your business.

Income-Based Method

The income-based method is the one that is commonly used and the most known. With this approach, you are looking at the amount of money that the business has generated for the owner. You will be looking at the cash flow into the business and then take into account any debt that is owed.

Multiple of Discretionary Earnings Method

With this method, you are looking at all of your discretionary earnings; that includes pretax, salary, and depreciation earnings, along with any other expenses there may be. When you use this method it's important to realize there are two steps to it:

  1. You need to calculate the discretionary earnings for your business for the next several years. The best way you can do this is to take your most recent earnings and estimate what may likely happen in the future. You can also take the average from your last several years and use that figure.

  2. You want to multiply the figure that you get in step one and multiply it by anywhere from 0 to 3. The figure you will get will account for the tangible business assets your business will utilize going forward.

These are the most commonly and most effective methods you can use when you prepare to sell your business. Seeing that you know these methods, you can make an informed decision that will work best for you when you are ready to sell your business.

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Our Sellers except us to achieve the highest and best offer for their business while taking the least amount of their time away from it as possible. That is because the absolute best use of their time is to continue to run and grow the company.  If revenue or profits begin to decline, buyers will walk away or decrease their offer. Transworld's philosophy can be summed up in a ten step, how-to strategy that culminates with the sale of a company. This proven method has been used to sell hundreds of businesses.  Here are the steps. Step1 Comprehensive Business Analysis and Feedback As your business broker, the first thing in our how-to strategy is to analyze your operation, finances, market potential and industry trends. We take that information and advise you on steps to prepare your business for sale, and  generate a business profile that represents your company in the most attractive way possible. Step2 Sale Structure We identify the best possible price range to sell your company. This is based on solid facts, the condition of the market, projected growth, sales potential and the sale of similar businesses within your industry. Transworld’s experts apply sophisticated, time-proven valuation techniques to ensure that your price is appropriate for the current market condition. The price must not be too high or too low. Yet, it must represent an attractive investment potential for the buyer. Step3 Confidentially Network The Business For Sale During the selling process, we utilize the latest technology to present your company to other business brokers and strategic buyers all over the world. This greatly multiplies the effort in your favor. With Transworld Business Advisors, you have literally thousands of industry professionals confidentially representing your company to buyers.   Step4 Confidentially Advertise To Buyers Our aggressive marketing program ensures your confidentiality and provides maximum exposure for your company. Your listing is placed in various industry databases, Internet sites, and publications which are constantly updated. We spend more money in advertising and marketing for buyers than anyone else in our industry. Step5 Control The Information Flow We organize all necessary documentation and release information only as needed. We use limited information when advertising to maintain confidentiality. Buyers are pre-qualified and required to execute a confidentiality agreement before receiving any sensitive business information. Step6 Create Competition For Your Company We attract thousands of buyers, creating competition for your business. Buyers are qualified for financial ability to meet the offer, and we engage you with only the most qualified buyers. Once you meet the best of the buyers, we urge them to prepare and present all offers. We can continue to engage potential buyers on your behalf as negotiation on an offer is in process and have another interested party ready to go should a buyer change their mind. Step7 We Negotiate For You To Achieve The Best Price Appropriate negotiation is crucial to achieving your best price and terms. We have the expertise to establish sound and resourceful negotiating techniques on your behalf. Transworld has trained all of its agents in the art of negotiating through curriculum that we have created specifically for our industry. Never negotiate without planning, expertise, or from a position of weakness. Step8 We Provide Exceptional Support To You Through The Due Diligence Process We take pride in our exceptional service. Only half of the job is finding the right buyer who will pay your price and meet your terms. The other half is getting that buyer to the closing table. We quarterback the deal, work with the accountants, lawyers, banks, landlords, and other third parties that could jeopardize the success of the transaction. We realize that you depend on us to guide you through the sale of your business. We make the transition simple and easy for you. We know when an opportunity for you may arise and are always there to take advantage of it. We also know when someone is trying to kill your deal or is being unreasonable and how to handle those situations. Step9 We Are There From Beginning To The Closing We help manage all administrative procedures, licenses, inventory counts and lease assignments that may be required. Transworld works closely with your advisors to ensure a smooth transition. Using the latest technology, we strive to be ready to work on your behalf to get the deal done! Step10 We Are There For The Transitional Phase And Beyond! Because we are in the business community, you may want to consult us from time to time after the sale. We will provide you with the assistance after closing. Transworld will always remain in your corner! Schedule Consultation Now

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