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Most Commonly Asked Questions Selling a Business
Written by: Patrick Findaro
Do you want to sell your business but you are not sure where to begin? In this article, you can find some of the most frequently asked questions business owners have on how they can sell their business.
How much is my business worth?
Typically, the amount you can sell a business highly depends on the current market at the time of sale. For the most part, it is the buyer that controls how much to pay for a certain business. Price seems to always fall on the current market value. Generally, a business is worth its ability to earn, multiplied by several factors. This refers to the value applied to the profit of a business.
The buyer of the business generally will not value the amount of money you invested in the business.
How do you price your business for sale?
To determine a price for your business, the earnings it makes are a major factor to consider. If the business is not profitable, then the assets of the business are what will set the value. However, if the organization is making a small amount of profit, this is considered the owner’s discretionary earnings.
How long does it take for a company to sell?
The amount of time it takes to sell a business may vary depending upon certain factors. However, a good reference to figure the time would be the market value. The higher the asking price, the longer it may take. Business Exits suggests that it may take an average of seven months to close a business deal.
How can you sell your business quickly?
One of the sure ways to quickly sell a business is to have an attractive asking price. If the terms and the right price are there, then a business should not have trouble being sold. Perhaps one of the quickest ways to sell a business is to not require an up-front payment (or at least significant seller financing). Instead, the seller can use a technique referred to as an earnout, which is performance-based. This scenario could work in the case of an employee or a business partner.
What type of business is the best to sell?
While any business in a variety of industries can be sold, the major difference is the value of the organization compared to others in that specific industry. Several industries are more attractive and have higher values such as property management or technology companies.
