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  • Evaluating Your Company’s Market Value

    Game Plan

    In-Depth

    Setting a Price—and a Deal Structure

    You’ve got your appraiser’s valuation. Now what?

    First of all—is it enough? With your accountant or financial planner, look at your total annual compensation from the business today, including all your personal expenses that the business has taken care of. Can the dollar amount from the sale generate what you need in the future to meet your living expenses?

    Think creatively. If the price dictated by the valuation can’t support your needs, here are some possible directions to take:

    • You may want to work on improving performance before selling. If you want to cut back on your own involvement with the business right away, a capable manager might be able to achieve the needed growth before a sale.
    • All-cash transactions often command a lower valuation from the market. Are you willing to work with a buyer to structure the deal more attractively?
    • You can negotiate terms like holding onto some of the business’s assets and leasing them back to the buyer to make the deal less daunting up front.
    • You could also take on some of the financing, including a low interest rate, to help a buyer meet your price.
    Game PlanGame Plan

    Game Plan

    Getting input from your business appraiser and financial planner is critical. You need to know precisely where you stand in financial terms. Your accountant should also weigh in on helping you structure a deal to avoid negative tax consequences.

    The person you hire to broker your business should be an expert negotiator, and well-versed in ways to structure deals attractively for both you and your buyers. Ask them for ideas.