When you decide to put your business on the market you have to be clear about what is for sale. What are you selling?
You are selling your business assets – yes – but there are two types of asset… tangible and intangible. Sale of the tangible assets is quite easy, you just bring in the auctioneer. However, you can not bring in the auctioneer for the intangible, how would they value the goodwill or staff!
So right at the beginning of the sale process you need to be updating / creating your asset register. Once updated, the value can be established.
Intangible assets are slightly more complicated, Anthony Jay Dee writes:
“no one has ever nor will ever come up with a precise valuation formulae for goodwill”.
Goodwill is hard to value but it is that which creates the profit.
For more clues as to how to establish the value of your business read the attached extract from by Anthony Jay Dee.