Selling a business is a major financial transaction that comes with significant tax implications. Without careful planning, you could end up paying more in taxes than necessary, cutting into your profits. Implementing smart tax strategies can help you maximize the proceeds from the sale and minimize your tax burden. Here are some key strategies to […]
1. Prepare the financial statements and determine the SDE. All valuation methods hinge on financial performance, so the first step is preparing the company’s financial statements. Gather financial records for the past three years, including: If the business hasn’t been operating for three years, consider using a projection model Next, work with your accountant to
If you’re seriously considering selling your business, you need to be prepared to answer questions from potential buyers. While every business transaction is unique, there are common concerns that nearly all prospective buyers have. Being ready with clear, honest answers will give you an advantage in negotiations and help you close the deal faster. 1.
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Typically, one of the first questions we get asked by business owners is “What’s my business worth? There are many different variables (tangible and intangible) that are considered when calculating the listing price including current financial performance, overall business model, profit margin ratios, profitability trends, growth potential, and competitive landscape to name a few.
RBC will analyze your financial statements and recast the P&L to include any addbacks in order to arrive at the seller’s discretionary earnings (SDE). The SDE is used in conjunction with an earnings multiplier to arrive at a valuation range.