Why every business owner needs to know the current market value of their business

Here are the top three reasons why every business owner needs to know the current market value of their business.

#1  Get ready for even more unsolicited calls to buy your business.
With an estimated $2.5 Trillion of cash on US balance sheets, public and private companies and private equity groups will be even more aggressively seeking acquisitions.  Because of the shortage of good businesses for sale due to COVID, business owners can expect even more unsolicited calls about selling their company.  If you're tempted to respond to a call, you need to know the current market value of your business before starting a time consuming and potentially distracting discussion.

#2  If the current fair market value of your business doesn't achieve your exit goals, don't engage with a buyer.
If the only way you'll sell your company now is if someone "will make you an offer you can't refuse", it's a pretty good bet it's not going to happen.  A prospective buyer's banker, accountant, attorney and M&A advisor will make sure you get a fair price based on your current performance and no more.  Before engaging with a buyer, meet with your financial advisor to understand how much you need to accomplish your retirement goals.  If the current fair market value doesn't accomplish your goals, don't even engage a buyer.

#3  Understand the value drivers of your business from a buyer's perspective.
As part of the valuation process, you'll come to understand the key value drivers of your business from a buyer's perspective.  If now isn't the time to sell, the valuation process will help you understand the value gap that you need to bridge before transitioning the business in the future.  You'll be able to work with your management team and outside advisors to develop the strategies and tactics needed to build future value and achieve your retirement goals.

If you're unsure of the current value of your business, Lingate's market-based valuation and 5 - 7 page report could be the tool you need to prepare for the opportunities ahead.