To avoid getting false hopes about the value of your business, you should always seek an expert’s help to evaluate your business properly. Doing this ensures you don’t overvalue the business and make it difficult to sell, or undervalue it and leave money on the table.
Getting an accurate price evaluation will set you up for a successful sale and allow you to undergo your next business venture quickly and easily. With the help of our experts at AutoCenter Sales, it’s easy to plan a realistic exit strategy and set yourself up for future success.
Let’s discuss how to value your business correctly, so you can get to work!
Analyze the Market Fully
While you may believe your automotive business is worth a certain amount, that may not be the case. Analyzing market trends is the best way to determine what you could reasonably ask for in price when selling.
If you see that other businesses have recently sold for high prices and believe your business is worth just as much, if not more, contact our team. Our expert brokers will go over the entire market and analyze trends to determine whether it’s a good time to sell and how much money you could potentially sell for.
Maintain Reasonable Expectations
Even if you analyze the market and think you know all there is to know about a reasonable selling price for your business, you should still consult a brokerage firm like AutoCenter Sales. Our team will help you look beyond the price point, so you can get the full picture before making your decision.
Additionally, you have to have reasonable expectations when it comes to the sale of your business. Not every business deal is like winning the lottery; it’s not a guarantee to instantaneously get rich.
While it is fun to contemplate how you will spend your new-found money, it’s important to not bank on that too much, as many business sales are not as lucrative as you may believe.
Is There a Demand?
The larger the demand, the more chances of people investing. For example, if you purchase a car wash, and no others are in nearby areas, it will be easier to attract customers.
The higher the demand for the product, the more value it will have, and the more likely to make money and build confidence for investors based on the earning capacity.
What Does the Local Economy Look Like?
The economy will also affect the business valuation, because the fact remains that in harder economic conditions, some companies are forced to liquidate.
In a stronger economy, there are typically less businesses available and more buyers, resulting in higher selling prices and greater business valuation.
What Are the Methods for Business Valuation?
Whether you have an automotive parts store or car wash, there are multiple ways to analyze business valuation, and our experts are ready to assist you!
This is the simplest option and is calculated by the total number of shares versus the company's share price.
This value is based on the equity the shareholders have in the business per the balance sheet statement. The book value is just calculated by subtracting total liabilities from the company's total assets.
This calculation is based on revenues generated over a specific period. It is then applied to a multiplier dependent on the economic environment and the industry.
The earnings multiplier is more accurate than the time's revenue because the companies' profits will be more reliable than the sales revenue. With this method, the multiplier adjusts estimated profits against the cash flow that could be invested based on interest rates.
If you owned an automotive business, the liquidation value is the net cash the business would receive if all assets were sold.
Discounted Cash Flow
This method is similar to the earnings multiplier and is based on the projection of future cash flow and is then adjusted to get the business's current value.
Why Choose AutoCenter Sales?
Our top priority is to use all our resources and knowledge to help you understand your options and support you through a streamlined process. Buying and selling a business is an in-depth experience, and we know how confusing these processes can be.
With AutoCenter Sales, we offer support through your entire transaction and keep clear lines of communication, so you don't have to do it alone.
Contact Us for Expert Advice Today!
If you are looking for a reputable team to help you sell or buy an automotive business, our team at AutoCenter Sales can help. Our professional brokers and advisors will help you through every step of the process and advise you on different factors to consider before making your choice.
If you want to learn more about the unique strategy we create for each of our clients, give our team a call at 800-874-5793 or message us on our contact page today.