Do I really need an business appraisal in order to sell my company or is that just a service that you are selling me? This question is tough even for ME (someone who deals in business sale transactions on a daily basis). I meet with business owners everyday, and everyone who is looking at the prospect of selling their company always asks, the appraisal question, do I need one, or should I pay for one.
I will answer the question very simply, if you are going to sell your car you want to have all the records or registration “right”, value from kelly blue book, and maintenance records in order to make buyers feel like they are paying a fair price for your car. Fortunately we can all get on KBB.com and find out what our car is worth on the market today.
Valuing a company is a little more complex, than just getting on the Internet and spitting out a value, we need to pay an appraiser between $5k and $25k depending on the size of the business to do a in depth analysis, recast of the financials and provide back up data for every reason why the business is worth what it is worth. This shows the buyer that they should pay what we are asking and not haggle with you on price but only on terms of the sale. I think that the appraisal is a great supporting document that will cut out a lot of negotiation and help your deal close quicker.
As you contemplate the whether “to pay or not to pay” for a business appraisal always remember that with the powerful combination of a business intermediary and the right supporting documentation you will get 30-50% more for your business when it finally closes than if you try to sell your company yourself with out the appraisal.
Contact me if you need a appraisal or a brokers opinion of value BPO.