Business valuation guide for the business broker

As a business intermediary, you face a number of challenges to a successful business sale transaction. You work hard to build your portfolio of great businesses for sale. Locating a pool of qualified business buyers is critical. Once the right buyer steps forward and negotiations begin, as you know it is key to manage expectations on all sides.

Read on to see some of your hurdles and ways to address them effectively.

Key hurdles to overcome

Unrealistic seller expectations

Overpricing the business.
Not offering attractive seller financing terms.
Not prequalifying the business for SBA 7(a) or commercial acquisition loan.
Unwilling to make value-enhancing changes to the business before putting it on the market.

Qualifying the buyers

90% of buyers never buy a business.
Low ball offers coming from buyers that have no understanding of business value.

Managing expectations on all sides

Seller and buyer cannot agree on the deal terms.
Many deals fall apart in due diligence.

How ValuAdder helps

Manage seller expectations

Use 420 common Rules of Thumb to establish a realistic price range for the business. Quickly construct deal structures with the Deal Check scenario calculation to show the seller how he can get a better selling price by offering attractive seller financing. Let ValuAdder automatically account for the standard debt service coverage ratio, used by the lenders when approving the SBA 7(a) and commercial acquisition loans. Use 14 selectable multipliers in the Multiple of Discretionary Earnings method to identify unique business strengths and changes that can greatly improve the business value, increase the selling price, and your commission.

Qualify serious buyers

Use the Rules of Thumb in buyer meetings to establish a realistic price range and rebut low ball offers quickly. Construct solid deal structure scenarios that support your asking price and create sufficient cash flow for the buyer. Input your cash flow forecasts directly into the Discounted Cash Flow method to justify the asking price to the buyer. Prove to the buyer that business strengths translate into higher business value by selecting the appropriate multiplier values in the Earnings Multiple calculation.

Manage negotiations and due diligence

Use ValuAdder in negotiations between the business buyer and seller. Handle surprises. Keep emotions under control by using the time-tested methods in ValuAdder for establishing the business value and justifying the business price. Use the Deal Check calculation to construct a deal that pleases the seller and gives enough cash flow to the buyer. Show the parties how to fine-tune the deal terms and keep the critical due diligence and closing on schedule.

Next steps

Your time is money. Make every moment count. Use ValuAdder to put better deals together with less time and effort.

ValuAdder for the Business Broker