The Ultimate Sale! Considerations For Selling Your Company”(continued)

With respect to pricing a business, many points must be considered before one can arrive at the “right price” -one that is right for the seller and the purchaser. Earnings of the selling company should be carefully reviewed for possible pro forma adjustments, such as people on the payroll now who might be eliminated in the event of a sale to a larger company, any nonrecurring and/or extraordinary expenses and other items that can be properly adjusted to reflect more accurate earnings capabilities that the purchaser can expect after the sale.

Assets also need to be analyzed. Adjustments should be made, again on a pro forma basis, to establish realistic current values of all assets. For this purpose, an independent appraisal of the real property, if any, plant, machinery and equipment is the best method to establish current asset values.

With the earnings and asset adjustments in hand, a more intelligent approach can be made in establishing the “right price.” However, aspects of a pricing analysis, quite frankly, comes down in the end to judgment - the best judgment as to what is achievable in the real world for the particular type and size of company at that particular time. Pricing a company is not simple. It may require the service of an acquisition expert.

Well-prepared packaging means formal documentation presenting a complete factual analysis of all aspects of the business to be sold. This audit or “corporate profile” should include the history of the company, a description of its products or services, facilities and equipment, capabilities, management, marketing strategy and financial statement of past performance. It should present reasonable explanations of things that have happened in the past as well as the outlook for future performance of the business with proper documentation. It is a document that is going to make the very first impression on a possible buyer and is the major marketing method in the plan to successfully sell the company.