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Procedure for Selling Your Business |
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An experienced
intermediary should manage the sale
process from the first day you decide to sell your business until
the day you get your check. This will involve interfacing with your
other advisors (your attorney, accountant and banker). There are three
distinct phases, valuation, marketing, and negotiation.
After the required financial information is gathered, it must be recast.
Understandably, most small businesses suppress profits, thereby suppressing
taxes. When this occurs, their financial records do not reflect their
true earning power. For example, owners of small businesses
often reward themselves with benefits, which increase expenses and
reduce profits. |
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| Recasting
removes all direct and indirect owner related benefits. The result
of this process is a value referred to as Owner Benefit. While there are quite a few methods
of determining the fair market value of a business, the income approach
is usually the most relevant. |
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