Selling Your Business? - Yesterday is History!

By Fernando Simo


As we brokers begin the process of selling someone's business, we normally ask the seller to provide four specific items: Year-to-Date Financial Statements; at least three (3) years tax returns; a list of furniture and fixtures and; the lease agreement. All of these items will provide a piece of the puzzle in valuing someone's business and determining what the right price for it should be. In this article, I will focus on financials and taxes.

For most sellers, providing the last three (3) years tax return, in addition to current financials, becomes a real difficult chore. On the other hand, as I mentioned in previous articles, buyers rely heavily on good, recent, financial data to make a decision about the business. Yesterday is history! This is particularly true in a recessionary economy, where significant drop in revenues and profits results in lower market values.

Now let's assume that the seller provides the tax return and current financial data and we effectively "price" the business when we list it. It does not end there. What we need is an update of the financials, at least every six months. The primary reason is, of course, valuation. The value of your business may go up based on the current financials-after recasting. So we may be able to increase the price on the listing-the bad news is that if profits decline significantly, the seller may have to reduce the price in order to be competitive in the market place.

The problem some of us brokers face is that once the seller provides the initial tax and financial data, getting current financials is like "pulling teeth." The good news is that those who keep their listing "current" have a greater chance of selling their business than those who do not. Help your broker help you and remember, yesterday is history, today is what counts!

The author of this article, Fernando Simo, is a Business Broker in Orlando, Florida, where he helps individuals sell their business, buy a new business, get into a franchise system or with Mergers and Acquisitions. For more information, pease visit his webpage at http://www.bizbuyorsellflorida.com, send him an email at fsimo@tworld.com or call him at 407-361-8886.


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