Around the Web: A Week in Summary
A recent blog post from VR Business Brokers entitled “Selling the family company” explores the advantages and disadvantages of selling the family business. After building your business for many years, making the decision to sell it can be difficult. Maybe you’d hoped your children would take it over, or maybe you’re ready to retire and travel freely. Either way, there are options for selling your business and all of them come with pros and cons. Consider your options seriously because there are no ‘take-backs’ once you commit to the decision.
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A recent article from Divestopedia entitled “How Goodwill Impacts Business Value” explains what goodwill is, how it’s determined and why it’s an important factor in selling your business.
Goodwill is the accumulation of intangible assets of a business that contribute to profitability. Some examples of factors that affect a business’s goodwill value are branding and reputation, customer lists, developed processes and licenses and permits. All of these things reduce the risks of continued profitability for the new owner and therefore increase the value of the business. Goodwill is calculated as the difference between the purchase price of the business and the fair market value of the tangible assets included in the sale. The effort put into articulating the goodwill in a business will likely result in a higher valuation when sold.
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A recent article from Forbes entitled “Ugly Surprises That Can Derail Your Plans to Sell Your Business” discusses the personal financial reality of selling a business that many entrepreneurs are not prepared for.
What a business’s current value is in the hands of the present owner is different from the value of the business once it has changed hands. After consulting a business broker to determine the value of your business, it’s imperative to meet with a financial advisor and discuss whether you will be able to continue living your current lifestyle after the business sale. If it’s determined that you will not be able to, consider if you’re prepared to scale down your lifestyle or continue growing the business to the point at which you would be able to maintain your lifestyle.
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