Multi-Unit Franchisee Magazine Issue IV, 2015 | Page 70

Finance BY ROD BRISTOL

What’s It Worth?

Business valuation – tips for a faster sale

T

here are many misconceptions
about how to go about valuing
your business. In general, most
business owners have a value in
their mind that is usually several times
more than the actual value a sophisticated,
competent buyer ultimately pays. The
process of getting from perceived value
to sale price can be very, very challenging.
Here is some helpful information to get
you to a successful valuation and faster
sale of your business.
Business valuation
• Asset approach—Not normally used
in evaluating a going concern. Calculated
as assets included in the sale less liabilities
included in the sale; will be used only if
higher than income or market approach.
• Income approach—Based on a future earnings stream divided by a rate of
return. A typical rate of return is usually