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Bernard Benjamin Associates recommends that before a company is put on the market, the owner obtain a market valuation to learn what the company is worth based on current market conditions. The valuation will help the seller set the asking price, and will provide justification for that price when negotiating with buyers. A valuation is also required by some SBA lenders.
When an owner gets a valuation completed, it is important that the valuation be done by an independent 3rd party who has experience with hundreds of market valuations. The firm should have an extensive database of what similar companies in similar industries actually sold for, including the terms of the sale. While a business broker or accountant can give you a general idea of what a business is worth, we recommend you use an expert who has the database to reflect true market conditions.
Bernard Benjamin Associates works with nationally recognized 3rd party valuation firms to conduct market valuations. These companies are some of the largest valuation service firms in the country focusing on small to mid-sized businesses. They maintain an extensive database of actual transactions and utilize widely accepted methodologies for determining a company's fair market value.
In our profession we hear of many ways to value a business. Some value a business based on cash flow, others from revenues or gross margin, others from cash flow and assets. However, the only way to know if a formula works is to see what industry related businesses are actually selling for and compare that to the formula. The most universally accepted approach is to value the business on adjusted cash flow.
With so much at stake in the sale of your company, using a qualified intermediary may save you several times what you pay him or her in commission.
Bernard Benjamin Associates
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