BUSINESS SELLING VS BUSINESS WINDING UP

Business selling literally is the monitory exchange of the business with a buyer. A business is valued by professional business valuers in many times these are Chartered Accountants who value both the tangibles and intangible items in the business. The business is then put up for sale to a willing buyer.

Business winding up or liquidation is ending the business by selling its physical or tangible assets to pay off creditors, with remaining proceeds distributed to the business owners, and with no compensation received for the value of non-tangible assets such as business goodwill. This is always the worst-case scenario since this only attracts less than 15% of the business value for a goods business and about 10% for a service business.

Market your business at the point of sale to get maximum returns

Your Business can be Sold

The first issue anyone considers at business exit is if your business a good sale prospect.

In other words, will someone pay money to acquire my business or am I better off selling its physical assets and walking away? Too many owners assume they won’t find a buyer. Therefore, they automatically default to ending their businesses through a liquidation. But while liquidating allows you to recapture the value of the physical or tangible assets of your business – often at a giveaway – it gives you nothing for the value of your business as a going concern.

When you sell rather than liquidate your business, a buyer pays to acquire not only the physical assets of your business – the assets listed on your balance sheet, but also to acquire the goodwill of your business, including the worth of such intangible assets as your business name, reputation, clientele, systems, and marketplace advantage.

The only way to harvest the value of business goodwill is through a business sale. So, the decision to sell rather than to liquidate rests on a determination of whether the goodwill of your business – the value of your business beyond its physical assets – is of high enough value to attract the interest and prompt the purchase decision of a buyer.

A handshake is appropriate at the conclusion of a sale

Advantages of Business Selling

When the sale is made there is a win-win situation with the seller having 100% of the business value and the buyer having gotten an asset ready to start earning him returns on the investment and mainly:

1. Buying a going concern business with all physical assets of a business, as reflected on the balance sheet, plus the worth of the business as an ongoing entity, based on its recent past performance attracting and retaining customers and experiencing financial success.
2. Goodwill value of a business, reflecting the amount a buyer is willing to pay for the intangible assets of a business including the business name and reputation, clientele, operations and systems, and marketplace advantage.