December 22, 2021 at 12:36 pm #12344
A WMCO Manufacturing member in the London region is looking to retire and sell his business. The owner is interested in guidance on how to effectively value and sell the business. Please respond to this member inquiry with your feedback.
Share your best practices!December 22, 2021 at 12:36 pm #12345
I haven’t put a number on my business, but this is how I would break it down to create a price.
Inventory- 90-100% of the cost of the current inventory you use regularly. The stuff that has sat around for a long time isn’t really worth much maybe 10-20% of original cost.
Machines- make a list of what you have and research what similar are going for.
Small tools and miscellaneous- not really worth much- I would make a batch price (if they are well used and new cost is $2000 I would put in for $300 at most.)
Office fixtures and computers- depends on how old they are. I don’t think it is worth much either.
Computer software- I really don’t know how to put a price on it. (may be negotiated?)
Vehicles- same as machines, see what they are selling for ( I would look on Kijiji)
Client base- I heard that you ask either 1 year worth of profit or two years (I think 2 years)
I think it’s very hard to put an accurate price on a business. It is always worth more to the owner because of sentiment. But depending on who you sell to or if you just want to cash out are other things that will affect the price.
Good luck!December 22, 2021 at 12:49 pm #12347
The first call should be to your accountant and then your lawyer because both will advise. First they will advise whether the company is ready to be sold. They can determine whether to do an asset sale or a share sale based on the structure of the company and the structure of the business. They may have the expertise in house to value the company, or may have a firm they work with, that will market the business to prospective clients. The business will be worth more if it can operate without the owner profitably. Is the business ready to be sold, or does the owner just want to sell will effect valuation.December 22, 2021 at 5:01 pm #12349
I used the services of David Barnett about 2 years ago when considering selling my business…..https://www.howtosellmyownbusiness.com/
I was very impressed with his knowledge and very satisfied with the business valuation and advice he provided. His fees were very reasonable.
I highly recommend his services to all WMCO members considering selling their business. Please let him know that I recommended him to you – thanks.
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