What is the blood, sweat and tears of your business worth, and how do you convince a potential buyer of this value in an easy to understand format?

As the seller of your business, how do you best provide a reasonable explanation in support of the valuation you provide for your business as well the necessary supporting documentation?

Financial Modeling Services Will Help You Convey the Full Value of Your Blood, Sweat and Tears to Potential Buyers to Get the Full Value of Your Business

In a business transfer transaction, both the buyer and seller need to come to an agreement of acceptable valuation and terms, normally based on assets and a projected cash flow over a set period of time. When a seller provides the buyer a reasonable explanation for a valuation and documentation to support it, a transaction is more feasible. FMS will identify the valid reasons you need to justify your determined value for your business. Keep in mind that if your business valuation is too high, such as a 3% return on a buyer managed investment with above average risk, your justification may not be determined reasonable by the buyer, and it may not be enough to facilitate the sale at your asking price.

A buyer can always walk away from a transaction after using up much of your time, therefore you need to be concerned about the buyer’s perception, as you need them to complete any transaction. FMS will give you the tools you need to get the highest price possible for your business while ensuring its ongoing success.

FMS will work with you to analysis your business. FMS will categorize and organize the business P&Ls into controllable and non-controllable costs and fixed and variable expenses. FMS will create a projected P&L with you as the seller, based on specific business variables. Each expense item will be assigned a value or a “goal” that will need to be held constant by the buyer in order to meet the determined net income at set revenues. The contribution margin is then calculated that would be used to project the impact of any needed reinvestment or change in revenues. A net present value (NPV) of business cash flows for any given period up to 30 years is created. The NPV prices future dollars as today's dollars. The NPV is an initial valuation of the business as determined by the discount rate. The discount rate factors in the required rate of return, risk, inflation expectations, and cost of capital. All of this is shown in any easy to read, easy to understand format. Multiple independent variables can be changed to run different financial scenarios where the effect on all dependent variables and net cash flow can be understood.

Many times, a seller can have difficulty providing the documentation to support their business valuation. FMS will work with your team including accountants, book keepers, etc., or assist you in putting together the necessary documents to create a financial model of your business.

To Learn More, Download Our Client Introduction Package

FMS can help you create a professional and complete business offering information memorandum that you can provide to potential buyers that conveys all necessary information about your business.

Financial Modeling Services will help you sell your business as quickly as possible, at the highest price possible, so you can move onto your next deal or to the beach in the Caribbean.