How To Price A Business
When it comes to selling or restructuring your business, you need to get these tips that are given by individuals with great skills on how to price a business which will ensure that you get the most appropriate value for your business. While you are looking for the most appropriate method to price a business, you should ensure that the appraisal method used can be backed up by market standards in terms of market share, market rich and the profit standards for the industry.
- List what you are willing to sell. While determining how to price a business, you have to establish the assets or share holding stake you want to relinquish. You should determine the price of a business by considering the value of the goods or share that you are selling and leaving out what you do not want to sell while carrying out your calculations.
- Establish whether to hire a valuation consultant. You should get professional advice from a certified valuation consultant on how to price a business if you are not well enlightened on the valuation process. The valuation consultant will decide the most appropriate method to determine the price of a business with credible reasons on why to use it.
- Determine a suitable method of calculating price of a business. You can adopt the calculation of the value of tangible assets to establish the price of a business. This method involves calculating the sum total of all tangible assets including properties, inventory, supplies and the equipment on the business.
- Find out the value of the intangible assets. This includes intellectual properties, existing contracts, customer good will and the list of regular customers. These intangible assets are somehow hard to calculate since you cannot put a monitory value on the value a customer brings to the company and therefore, they are left to your discretion to place an amount for them when establishing the price of a business.
- Consider the market value of the business. The market value when establishing how to price a business considers the percentage of customers the business holds on the industry as compared to competitors. Establishing the market share determines the competitiveness of the business in the industry and shows its growth potential.