Selling your business can be a lengthy process, with many different stages that both you and the buyer must go through to ensure that both parties are satisfied with the outcome. One of those stages is the business valuation, and it is arguably one of the more important parts of the process, as it gives you an idea of what you can expect from the sale, and tells the buyer what they can expect to pay –and what specific assets they will be getting for their money. You can, of course, conduct the business valuation process yourself, but this is not to be recommended: without the expertise and impartial nature of an outside consultant, you will likely misvalue your business.

Here’s why you should use an established mergers and acquisitions consulting company to avoid blindspots.

How Business Valuations Can Help You Avoid Blindspots


Whether you built your business up from scratch or took it over as a going concern, the chances are high that you have a strong emotional connection to the company. This is a natural by-product of the long hours and stress that the business has cost you, but unfortunately, it can be a primary reason for incorrect valuations. For example, you may have been running the business with a refrigerator unit that is on its last legs. You ‘know’ that there is another year or two in the equipment before it needs replacing, but to the buyer, it is a liability and will affect your valuation. You need to take emotion out of the process entirely –try and see the business as a buyer would, and then make any changes as
necessary: either to the business to improve the valuation figure, or to your expectations so you can negotiate from a reasonable place.


Another common mistake when it comes to valuing a business stems from a lack of thoroughness. You need to evaluate absolutely every single part of the company –equipment, premises, leases, contracts, warranties, suppliers, customers, competition, etc. Along with this, you should have a fairly good idea of what the immediate and mid-term growth potential is –this will affect the pricethat a buyer is willing to pay. Mergers and acquisitions experts can help you here, as they should have experts on-hand in conducting accurate business valuations.


The final ‘blindspot’ is not necessarily the fault of the business owner. Howmuch comparable businesses have been sold for in recent transactions is a key indicator of what the fair market value of your business is –but this information is not readily available to the public. Once again, your M & A team should be able to help, asthey will have hands-on experience of working on other similar deals in the recent past.