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Best ways to know how much a business is worth

On Behalf of | Dec 5, 2016 | Buying & Selling Businesses |

For North Carolina residents looking to sell their companies, there are many ways to put a proper valuation on them. While it is still part art and part science to value a business, the internet has helped take some of the guesswork out of doing so. The first way a business owner may value a company is to use the market-based approach.

When using this method, a business owner looks to see how much other similar companies have sold for recently. The one downside to this method is that it uses average values as a guideline, and that may not necessarily represent the true value of a certain company. More commonly, a company will be valued based on the income that it produces minus any debts that may be on the books.

It is important that a business owner factor in both tangible and intangible assets. An intangible asset may be goodwill with customers or relationships that have been built within the community. Having good relationships with customers and others should make the brand worth more, which means it should receive a higher valuation regardless of what method is used to come to that value. Those looking to sell their company may also need to consider how quickly they need cash and any other market factors that may influence the final sale price.

If an individual is looking to sell business assets, it may be worthwhile to talk with an attorney. Legal counsel may be able to help a business owner come up with a way to value those assets as well as review serious offers to purchase them. Doing so may ensure that the deal is conducted with the best interests of all parties in mind, which may reduce the odds of future legal challenges.