Assessing the Assets of Your Business

The Biz Blog

July 06, 2010 by Robert Dean

If you are thinking about selling your business, it would be greatly beneficial to catalog all of your assets in order to help with a successful sale. A business's value is calculated in part by its list of assets. The more you can substantiate your asset value, the more it will increase the business value. Assets are different in every business, and one asset may be more or less important depending on the business and industry. Make sure that you write down and understand how all of your assets contribute to the success of the business.

Some of the assets that a seller needs to address include:

Equipment: Is the equipment old or new? What condition is it? What's the replacement value?

Trade name, Trademarks, & Patents: Does your name and product represent value to your customers?

Inventory: How much inventory do your have? What condition is it in? What's the value?

Customer & Database Contacts: How many contacts do you have? How many are repeat customers?

Key Employees: Will a Key Employee stay on with a new owner? Will any customers be lost by replacing a Key Employee?

The Lease: What are the terms & conditions of the Lease?

Business Records: You might not think of your financials as a hard asset but if you have great records to show, you will more likely stay close and validate your asking price.  Positive Cash flow is the most common measure of the Good Will component of a Business's Valuation.

In order to calculate and understand the overall value of a business, you need to look at many different components of the company. As a Business Broker, I look at the many variables, including assets, in order to properly value a company. A business with little assets but has a high asking price makes sense, only if it has a lot of Goodwill applied to the value. Goodwill is anything above the value of the assets for the company.

By Business Broker Robert Dean, BizEx Profile 310-793-6757

Robert Dean's website: http://www.robertdean.biz

How to Sell, Business Valuation

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Robert Dean

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Marina Del Rey, CA 90292
Office: (310) 882-2200 ext 122
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