It’s Business, And It’s Personal

Small businesses selling for at or above market value

On Behalf of | Mar 5, 2018 | Buying & Selling Businesses |

Individuals who sell their small- or medium-sized companies in North Carolina or elsewhere may be able to get more than their asking price. That is the finding from a fourth-quarter survey taken by industry groups in collaboration with Pepperdine University’s Graziadio School of Business. People who were selling their companies for less than $500,000 were getting 3 percent more than what they wanted from the sale.

Companies that were sold for at or more than $500,000 but less than $50 million went for almost the full asking price. Those companies went for 99 percent of what their owners wanted to sell them for, which was up from 90 percent the previous year. Of the companies that were purchased for $2 million or less, 70 percent of them were purchased by individuals. Individual buyers purchased 40 percent of companies that sold for more than that. Many of the businesses sold despite a lack of planning by their owners.

Typically, a business owner starts preparing for a sale years in advance. However, the survey found that three out of four companies that sold for under $500,000 were purchased despite a lack of advance planning. The same was true for half of the companies sold for $500,000 to $2 million. Burnout and a desire to retire were two reasons commonly cited for choosing to sell a business.

In many cases, business transactions may proceed more smoothly when planned in advance. It may be a good idea to have an accountant and an attorney on board when it comes time to sell a business. Doing so may help a business owner find a buyer who is willing to pay as close to full market value as possible. It may also make it easier to structure the deal in a manner that is favorable to all parties.