Maximizing Your Business's Value Part 1 | Determining How Much you Need to Sell for artwork
The Cash Flow CFO Podcast

Maximizing Your Business's Value Part 1 | Determining How Much you Need to Sell for

  • S2E44
  • 16:30
  • October 2nd 2023

“If they've got a lot to choose from, it becomes that much more important that your business is set up correctly, and you have all the components in place to increase the valuation that you're going to receive when you go to sell your business.”

-Andrea Jenson

Welcome to a brand new episode of the Cash Flow CFO Podcast. Join me on this solo episode as I discuss a comprehensive agenda that covers crucial aspects of selling your business. By the end of this episode, you'll have a clear understanding of how to determine the value you need to sell your business for to secure your retirement and how to assess and increase the current value of your business. So, let's dive right in!

Join us to learn the whole story!

“when somebody says, Hey, I like your business, I want to buy it, let me come in and look under the hood, I need to see how everything is structured. So that's the structure of your entity.”

-Andrea Jenson

The Growing Competition:

Before we delve into the nitty-gritty of preparing your business for sale, it's important to understand the landscape. There's a massive wave of business owners, particularly baby boomers, looking to exit their businesses in the coming years. This flood of sellers means that competition is fierce, and this can drive down the prices of businesses. To stand out in this competitive market, you need to ensure your business is not just profitable but structured for a successful transition of ownership.

Why Many Businesses Don't Sell:

Unfortunately, not all businesses that go up for sale actually find buyers. The sad truth is that only 30 to 40% of listed businesses end up selling. There are several reasons for this, and understanding them can help you avoid common pitfalls. Many businesses lack professional management, meaning they can't function without the owner. Additionally, they often lack proper documentation and a clear recipe for generating profit. But one of the biggest roadblocks is the lack of readiness for due diligence.

The Importance of Due Diligence:

Due diligence is the process where potential buyers examine every aspect of your business before committing to a purchase. This includes examining the structure of your entity, the accuracy of your financial statements, tax compliance, and legal matters. When businesses aren't adequately prepared for due diligence, buyers start deducting from the purchase price, leading to disappointment for sellers who initially had high hopes.

“if you determine that, okay, I need $15,000 per month to live off of perfect, multiply that by 12 180,000 A year is your annual income that you need to generate off of the interest of where you invest those proceeds from the sale. So 180,000 divided by 4% Your number is drumroll please. $4,500,000. So that is your exit number. “

-Andrea Jenson

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The Cash Flow CFO Podcast

Hey everybody, welcome to The Cash Flow CFO podcast, the show that explores the financial side of running a business for people who want to maximize profitability and scale with confidence.

If you want to make smart financial decisions based on data and put more of your hard-earned profits into your pocket, this is the podcast for you.

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