How do I position my business for sale?

FSB's Anne Fisher helps a sole proprietor discover his firm's true value.ess

(FSB Magazine) -- Dear FSB: I'm the owner and sole employee of a company that offers consulting services in a highly specialized area of corporate finance. My expertise is the core of the business. With no physical assets, how can I maximize my firm's value for sale?

- W. David Wilkin, Managing Director Strategic Management Resource Katy, Texas

Dear David: Pricing a business with intangible assets is tricky, but doable. Among the factors usually considered are net income and cash flow for the past three to five years, the prosperity of the firm's clients, its proportion of repeat customers, and the industry's strength - in other words, will demand for your company's services likely continue five to ten years from now?

Your firm's situation is more complex because you're a one-man show, says Sharad Mehta, owner of Tannenbaum & Aalok (tannaalok.com), a business-brokerage firm based in Cherry Hill, N.J. Mehta has arranged sales of many companies like yours, and he draws an analogy to a physician with a narrow specialty who wants to sell her practice. "Your whole business is based on your reputation and personal relationships with 'patients,' so you can't leave the day you sell it," says Mehta.

Instead, plan on staying put for at least a year to work alongside the buyer, introducing her to your clients, and easing her into the job until customers can see that she's as skilled as you are. With a specialized business such as yours, you may draw offers from rival firms. "The upside of selling to a competitor is that you can quit the day you sign the papers - you won't need to train the buyer," says Mehta.

"The downside is you may get a lower price because a competitor is more likely to see your clients as mere added business - and be less inclined to pay a premium for goodwill." If anyone is wondering what a business might be worth, online business broker BizBuySell.com has a free feature that lets you input basic facts about your firm and get a valuation. It's pretty accurate - I tried it using recent sale data for a few firms I know.

About BizBuySell:

BizBuySell is the Internet's largest and most heavily trafficked business for sale marketplace, with more business for sale listings, more unique users, and more search activity than any other service. BizBuySell currently has an inventory of over 48,000 businesses for sale, and more than 275,000 unique visitors each month. BizBuySell also has one of the largest databases of sale comparables for recently sold businesses and one of the industry's leading franchise directories.

BizBuySell was founded in 1996 and acquired by LoopNet, Inc. in 2004. LoopNet operates the largest commercial real estate listing service online, with more than 2.2 million registered members and 920,000 unique visitors monthly. The LoopNet online marketplace contains more than $440 billion of property available for sale and 3.4 billion square feet of property available for lease.

Media Contact:

Frank Krolicki
Walker Sands Communications
office: (312) 546-4127
email: fkrolicki@walkersands.com

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