INTRODUCTION
Selling a business is a crucial task that demands careful consideration and strategic planning. As a business broker in Florida, navigating the complexities of the market, negotiating deals and ensuring successful transactions is our daily routine.
However, a critical challenge we often face is the tendency of business owners to overvalue their companies when putting them on the market. This represents a significant obstacle to the sales process and can lead to unrealistic expectations that hinder success.
To address this issue, an extremely useful tool for employers is professional assessment. In this article, we will highlight the benefits of hiring a professional appraiser for both business owners and potential buyers.
THE TRAP OF OVERVALUATION
Understandably proud of their companies, owners often assign sentimental value that tends to overestimate the true value of the business. When brokers face inflated sales prices, the challenge arises of aligning seller expectations with market reality. If the broker fails to adjust the sales price in line with market values and gives in to the seller's demands, it is likely that the promotional management will fail, resulting in the inability to sell the company.
The SPECIALIZED APPRAISAL
To resolve differences in the approximation of the sales price, it is wise to hire professional evaluators to determine a realistic price in line with the market. Evaluators bring objectivity and experience, conducting a thorough analysis of factors such as financial performance, industry trends, market conditions, and the unique strengths and weaknesses of the business. A good appraisal should guarantee:
• Objective Evaluation: Professional evaluators offer an impartial evaluation, without emotional attachments.
• Market Credibility: A professional valuation confers credibility on the sale price, generating confidence in buyers and facilitating negotiations.
• Facilitates Trading: Equipped with an accurate valuation, brokers can trade with confidence. The valuation serves as a solid reference point, encouraging transparent and productive discussions based on real market values.
• Faster Sales Process: By establishing an appropriate sales price from the beginning, the sales process is streamlined. Potential buyers express interest and submit offers more quickly when they perceive a reasonable valuation based on market reality.
• Avoid Stagnation: Overvalued companies tend to remain in the market for a long time without attracting serious buyers.
COSTS OF A SPECIALIZED APPRAISAL
For a professional valuation of a small or medium-sized business carried out specifically for the purpose of selling, costs can be expected in the following ranges and conditions:
• Small business: $3,000 – $7,000
• Medium business: $7,000 – $15,000
• A detailed, formal report costs more than a summary estimate.
• The availability of financial data reduces evaluator effort and costs. .
• More experienced appraisers with credentials such as the Accreditation in Business Valuation (ABV) typically have higher rates.
CONCLUSION
Hiring a professional appraiser to obtain an accurate valuation is an essential investment in the successful sale of a business. Although it may be considered an additional expense, this small outlay translates into significant benefits by establishing a solid and credible basis for the sales price, instilling confidence in buyers, speeding up the sales process and mitigating the risk of stagnation in the market. Prudence and careful investment at the beginning of the process can make the difference between failure and success in the competitive world of business brokerage.
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Author: Alfredo González (Alfred@negociosenflorida.com)
Image courtesy of Pixabay
Author: Alfredo Gonzalez (alfredo@negociosenflorida.com)
Image courtesy of Pixabay