Do You Know Your Business's Value?
Have you considered selling your business? SouthState Wealth's Phillip Garrison, CTFA, CEPA, is here to help you think through the business succession planning process from start to finish. In this video, Phillip explains things you should consider as you navigate your path to the sale of your business.
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Hi. My name is Phillip Garrison and I’m a Wealth Advisor with SouthState Wealth. I am also a Certified Trust & Financial Advisor and Certified Exit Planning Advisor.Helping clients with their wealth and planning needs is one of my favorite aspects of my career. When it comes to your business, do you know the value of your business? When initially discussing this topic with clients, I like to use an analogy almost everyone can relate to. Imagine that your neighbor sells his home for $800,000. The next month, you list your home and after several interested, potential buyers tour your home, you receive an offer, much less than what your neighbor’s house sold for. Now, there could be many reasons for that, but wouldn’t you find it valuable and worth your time to determine potential problems prior to putting your house on the market? It can be extremely helpful and informative to take time to work with an advisor about your business. Do you, as the business owner, have blind-spots with respect to looking at your business objectively? Are there potential issues that could cause your business to bring less in a sale than you believe your business to be worth? Even worse, are there issues that could be “deal killers”.
A business generally represents 80% of the owner’s net worth. Identifying the true value of your business and then successfully harvesting that value becomes your paramount priority.
A formal business valuation, completed by a professional in that industry can be hugely valuable but also can be expensive. As with the example of the home sale, it might be a huge benefit to go through a process prior to investing in a formal valuation to identify your personal readiness and business attractiveness. Think of it as due diligence to identify potential pitfalls or deficiencies. Businesses sell in a range of multiples. While the private equity market and your particular industry may determine that range, you can determine where in that range your business will fall.
Have you been challenged to answer questions about your business, as if you were a third party, potential buyer?
Identifying and then remediating potential problems can put you on a path to personal exit readiness and a path to increase value and the attractiveness of your business, prior to a formal valuation. Here at SouthState, we would love to help you navigate and plan for the eventual exit of your business.
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