Vancouver Business Buy & Sell
The buying or selling of a business in Vancouver is starts with knowing the value of the business that is for sale. The fair market value for a business in a buy and sell situation is determined by many factors. A matured business that has been in operation for over a long period of time – over 10 years offers more data for evaluation then one that has less than 5 years history.
Small businesses for sale in Vancouver may range in price from just thousands of dollars to multi-million dollar enterprises. A business with assets like real estate, production machinery and equipment is more valuable that a business that has little real assets. Such businesses with good cash flow seldom come up for sale, and for those that are on the market, they are likely selling due to succession problem. For a business that is profitable and can show a good cash flow stable revenues and high entry barrier for competitors to enter the market, finding a right buyer willing to buy over the business is much easier than a business lacking the above attributes.
Determining The Value Of A Business
The complexity in determining the fair market value of a business is best resolved by getting the help of a professional evaluator. The valuation also helps a seller to determine whether a buyer’s offer is reasonable. A third party evaluation by a business evaluator will hold more sway with potential buyers than the financial statements produced by the company’s accountant.
The valuation process may also help to identify weaknesses in the organization and find ways to maximize its value. The sale of a company has tax implications, whether it is an assets purchase or the sale involves the transfer of a company’s shares. and how each impact your tax liability in a sale.
Earnings are the key to valuing a business
The most common method used to determine a fair sale price for a business is calculating the multiple of EBITDA (earnings before interest, taxes, depreciation and amortization) of the company. This is a measure to determine a company’s ability to generate operating earnings. The earning multiples vary by industry and could be in the range of three to six times EBITDA for a small to medium‑sized business.
In addition to using the EBITDA figure, a valuator also compares calculate the value of the company’s tangible and intangible assets. And, secondly to check what comparable businesses sold for. A buyer will be more willing to pay a premium if a business that is for sale has very promising growth and great earning potential.
If you like to have more info on buying or selling your Vancouver business, kindly contact James Wong at 604-721-4817, or send us an email.
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