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How to get maximum value for a business

| May 9, 2017 | Buying & Selling Businesses |

North Carolina entrepreneurs who are looking to sell their business should know that there are a few ways to do so. In a financial sale, a buyer is looking to take advantage of the future cash flow that the company will generate. As there is some risk that the revenue will go away, the buyer may not pay a premium for future cash flows alone.

The other type of sale is called the strategic sale. In such a scenario, a buyer may be willing to pay a premium because there is something about the seller’s business that will add to the profitability of the buyer’s business. A company called DT was acquired by STW Group for 10 times its pre-tax profit. This was because DT had knowledge about digital advertising in a time when digital advertising was becoming the latest industry trend.

For STW, buying DT was akin to buying an insurance policy that would help protect the company as advertising evolved. At the time of the sale, only five of its 200 employees knew anything about digital advertising. By thinking about the risks a potential buyer may face, any organization can maximize its sales price when it comes time to be acquired by another company.

Before a company decides to sell business assets, it may be a good idea to consult with an attorney. Legal counsel may be able to review the terms of the deal to make it more likely that it meets the best interests of the seller. An attorney may also be able to help a business owner complete a transaction while staying in compliance with applicable laws and regulations.

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