Why A Business Valuation Is Critical To Baby Boomers

Every hard working adult looks forward to the time that they can stop laboring and relax during their golden years. Many baby boomer business owners anxiously awaiting retirement have postponed it due to their financial state. With more than half of the businesses in the United States owned by the baby boomer generation, there are a lot of baby boomers that fear that their company is not prepared with a proper exit strategy. Chances are they are right.

Most business owners have an idea of what they want their business to be worth when they retire, but many have never set appropriate goals around the one number that matters: the fair market value.

Baby boomers that do not wish to hand their businesses down to family members often are interested in selling their companies to fund their retirements. However, before you decide to place your business on the market, it is important that you proper due diligence long before attempting to sell.

Every business owner interested in selling his or her businesses needs to receive a a professional business valuation for their company. A business valuation ensures the transaction yields the best purchase price. Before you can even consider selling your business, you need to determine what it is worth. A business valuation will help determine on multiple levels your business worth.

If you do not know the value of your business, you may not make a wise choice when it comes to agreeing to the final sale terms. Undervaluing your business will yield a low amount of money for something that you worked so hard to build over your lifetime. Overpricing your business can cause it to remain stagnant in the marketplace, which could put a halt on your retirement plans.

By hiring a professional company to complete your business valuation, you will be able to accurately assess the key factors that drive the value of your company. There could be many different elements that increase the value of your company. Your location, trademarks, equipment, workforce, and accounts receivable collection system can all contribute to the total value of your business. Such factors are all desirable components that many interested buyers would want to build their businesses on.

Not only can a business valuation highlight positive features about your business, but it will also expose some of the negative aspects of your business. Aspects including expenses of the business can be reviewed and written off so they do not affect the amount of funds that you can expect to receive from the sale. Maximizing the value of your business will help you increase the amount of revenue that you generate from its sale. It is imperative that all baby boomers that are interested in retiring and selling off their business assets have a business valuation performed.