Selling a Business

When it’s time to sell a business and place a realistic monetary value on it, a businessperson will often consult a business valuator, or try to figure it out themselves using business valuation formulas.  But however one may try to figure it out, there is no clear-cut answer to the question of how much a business is worth.  Volumes of books have been written about the subject of “How to Evaluate the Value of an Existing Business”, it would be hard to find more than one expert who arrives at the same price.

So how do you arrive at a value for an existing business?  Some of the more commonly accepted rules and techniques are outlined below.

Selling an existing business is considered an art form in some circles.  Entrepreneurs have found creative ways to make their businesses seem more valuable to potential buyers while keeping their P&L statements low enough to avoid high tax liabilities.  But one thing all business brokers agree on is this – the best advice for selling an existing business is to price it correctly from the start. Of course, there are dozens of other tips for selling your existing business, which are outlined below, but focus on the price first and the rest will quickly fall into place.

Selling a restaurant can be surprisingly simple.  As long as it has a loyal following, a good reputation, and the potential for future growth, finding a buyer is never the issue.  However, sentimental ties can make it difficult for some restaurant owners to separate themselves and their emotional ties to the business from the cold, hard facts involved in transferring ownership.

Owners who are looking to sell a restaurant may find it difficult to deal with potential buyers whose only goal is to fault and lower the price.  Potential buyers may pick apart restaurant’s menu, operational procedures, décor, or location.  In some cases, it is easier to deal with a business broker, who will help you get the best deal, minus any emotional upheaval. 

Selling a restaurant?  Time to get organized

If you plan to sell your restaurant, it may require some thick skin and getting organized with your time. Selling a restaurant takes time, and it could impact your ability to manage the day-to-day operations of the business.  Some sellers hire a consultant, or ask a business partner to screen potential buyers.  Remember, the buyer or his or her agent will want to review every detail of your bookkeeping records, which can be a very time-consuming and exhausting ordeal.   While attempting to sell the restaurant, you cannot afford to compromise on quality or sacrifice profits.  Even if a potential buyer is anxious to learn about the business, be sure to schedule meetings outside of your busiest mealtime hours.

Agreeing on a price can be another obstacle to selling a restaurant.  It may take some aggressive negotiation on your part to ensure you do not undervalue the real and intrinsic assets of the business.  Even if after a buyer and seller come to an agreement on price, it can be tough to hold the transaction together until the closing takes place.  For this reason, be sure you are working with a well-qualified buyer who has adequate cash, and be willing to offer seller-financing when necessary.

Be careful of buyers who are looking to turn a quick profit by buying and selling your business.  They may try to bully you into a lower price by undervaluing your business assets.  If you get a bad feeling about a potential buyer, remember, you are not obligated to make a deal unless you are comfortable with the offer. 

Selling a restaurant may seem like a major ordeal, but with the right preparation it can be a lot less stressful.

Are you thinking about selling your business, but maybe you are hesitant to do so because you’re afraid it will be undervalued by potential buyers?  Despite the economic realities, and the fact that it is still a buyer’s market out there, there are a few important techniques to ensure you get a good price for your business.  Some of the most common reasons that business buyers feel empowered these days are that so many selling companies are presenting weaker financials, and there is a lack of confidence in the economic recovery.  Plus, there is a lack of available capital for business buyers, so they are looking for the best deal possible.  However, businesses for sale that are performing well can still fetch a decent price. 


Here are some tips to improve the odds of successfully selling your business in a buyer’s market.

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