Article Summary: How Setting Clear Goals Minimizes Value Gaps in a Sale | Axial

By Gary Ampulski, Midwest Genesis | May 24, 2016

Original article has been thrifted to only cover the key points.  Full article can be read by clicking the link at the bottom of the article.

Determining business value can be a complex undertaking.

• For a buyer, value is mostly driven by the likely future return, discounted by the risk, associated with the investment.
• For a seller, value is more complex and reflects the past. Value can be defined as the sum total of all the elements that create satisfaction for the seller.  This is deeply personal and based on beliefs and not necessarily financials. 
• Knowing all the elements that influence value for a buyer and a seller can dramatically reduce gaps between the buyer's and seller’s perception of value.

The very first question any owner should answer when considering a sale of the business is “What are my goals?”

The goals must be actionable, precise, concrete, real, and in writing. 

The steps along the path necessary to achieve a seller’s goals can take considerable time and energy to achieve. 

The transfer of a business is driven by the motives of the seller:  fatigue, health, competition, additional investment, technology, government regulations, economy, family issues, funding retirement, employees, etc.. These motives are influenced by one or more of the following situations:

• the conditions of the capital markets,
• the state of the business, and
• the personal situation of the owner.

Understanding their influence on the readiness of the owner to pursue a transfer process is key to setting appropriate goals. Rob Slee illustrates the relationship of these factors with seller goals in the chart below:

As shown, selling a business can get quite complex. There are multiple motives, transfer channels, and transfer methods. Each are governed by different rules and authorities. Owners need to understand how these influence their path to satisfaction in a business sale.

This task is daunting for a business owner.  Using skilled advisors can contribute considerable insight and experience.  Finding the right advisor early in the process can avoid value gaps and answer the question: “If you could have seen the road from the beginning, would you have chosen a different path?”

Full article LINK

For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com or my personal website at www.BuySellFLbiz.com.