Tool Box
Issue No. 14 - December/January 2004
Selling Your Business at the Right Price
Having made the decision to sell your business – a major decision for any business owner – what price tag do you put on it?
The worst thing you can do is to base the value of your business on what you see in “for sale” columns in the papers, according to SA business broker Graham Chilman, of Chilman Business Pty Ltd.
Graham says that while valuing or pricing a business for sale is not an exact science, it should be understood by the vendor that a purchaser’s main aim is to minimise risk.
“Price is directly related to the risk of the purchaser making money or losing it,” he says. “The closer the asking price to the market price, the quicker the business will sell.
“Value is in the eye of the buyer – they won’t hand over the money unless there is perceived value in the transaction. Don’t try to sell too high – the business won’t sell unless it represents fair value in the marketplace.”
Graham says business owners should not try to sell their business themselves. An experienced business broker will know almost instinctively what the business is worth.
“The asking price is merely an approximation of what the business might bring in the marketplace,” he says. “The final price will be a mixture of many factors such as the terms of sale, the desire for the buyer to purchase and the motivation of the vendor to sell.”
Businesses perceived as “safe”, such as caravan parks, liquor stores and newsagen...
