Valuation of a business
“What makes a business valuable is the future that the business can help you reach” Juha Rantanen, CEO, Suomen Yrityskaupat Oy.
Just as there are no identical businesses or buyers, there are no identical changes of ownership either. The value of a business depends of the business itself, the world around it and the buyer as well as countless factors related to the aforementioned.
In practice, small and medium sized businesses’ values are defined in two ways: the business’ capitalized income value and the value of the business’ debt free assets or substance value. Although there are several valuation methods and defining value is demanding work, which should be done by professionals, it is useful to at least be aware of these two methods.
Selling price estimate
The selling price estimate gives a realistic estimate of the price the business could be sold for. It is the best and cheapest starting point for someone planning an acquisition, sale or generational transfer of a business. A selling price estimate is a short, clear and easily understandable estimate of the business’ selling price right now.
Taxation in business sales and acquisitions
The party who sells their property receives the proceeds of the sale and pays taxes for them. If the entrepreneur’s shares, perhaps the whole limited liability company, are sold, the entrepreneur pays the taxes. If business operations and assets are sold, the limited liability company receives the proceeds and pays the taxes. Private entrepreneurs don’t need to consider these options, as their only option is an asset sale.
Preliminary consulting is free, absolutely confidential and doesn’t bind you to anything further. Our experts are experienced professionals in the field, which means your problems might be solved in preliminary consulting. Our experts also know who to turn to, if your problems aren’t in their particular field of expertise.
Instructions for buyers
There are many good reasons to buy a business. Buying a business is a viable option even for someone beginning their entrepreneurship. If the acquisition is expertly handled, there are no surprises and business operations can commence immediately. Customer flow and invoicing aren’t interrupted.
Succession roughly refers to a situation, where the ownership of a business changes within the family or to close relatives. If this isn’t the case in your situation, you shouldn’t read any further even if the buyer is considerably younger than the seller. Age difference doesn’t matter, but relation does.
A checklist for business sales and acquisitions
A business sale is always a unique event. For most entrepreneurs, selling their business is the biggest and most important sale of their career. Both financially and mentally. An entrepreneur is rarely a professional in business sales themself. This is why the help of an experienced and multiskilled business broker is important for the future.
Instructions for sellers
A business sale is a unique event. For most entrepreneurs, selling their business is the biggest and most important sale of their career. Both financially and mentally. An entrepreneur is rarely a professional in business sales themself. This is why the help of an experienced and multiskilled business broker is important for the future.