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For many companies, 2011 can be categorized as a transitional year. Business owners finally appeared to be settling in and getting comfortable with the “new normal” that has presented itself after years of unpredictability and turmoil resulting from a wavering economy. We have found that the inertia that was taking a strong hold on many business owners began to lift and there were many strategic acquirers in the market, as companies continue to recognize the advantage of growing through acquisition versus the difficult task of doing so organically.

While you may be thinking about selling your business, the timing may not be right for an outright sale. Perhaps the shareholders remain passionate about the business and want to increase its value prior to pursuing a traditional sale. A merger could be a good solution when a company has a solid foundation but may lack critical mass, may be facing cash flow challenges, or be lacking other key components. While this may impede a sale, acquiring companies may want to capitalize on synergies such as an expanded geographic footprint and/or increased services and product lines.

While the importance of timing is paramount, it tends to be underestimated when considering the sale of a business. Determining the “right” timing is increasingly difficult in today’s environment with many complicated external factors impacting business value and marketability. These external factors include unstable and unpredictable economic climate, rapidly evolving technologies, unreliable funding sources, and uncertain capital gain tax rates.

Sun Mergers & Acquisitions’ sister company, Sun Business Valuations, conducts business valuations for a wide variety of purposes. These reasons include negotiating a sale, securing financing, settling a legal dispute, and for a shareholder buyout to name a few.

Typical high-level concerns for business owners considering the sale of their business include maintaining confidentiality, understanding and obtaining a realistic company valuation, formulating a favorable deal structure, and choosing the right professionals to represent them in the process. An additional, and more emotional concern for many owners of privately held, entrepreneurial companies is, what will happen to their employees post-closing.

As a Merger and Acquisition firm, we often receive the following question from entrepreneurial business owners – how do I know what my business is worth? Business owners are commonly looking for an estimate of value to determine if they should consider selling now or sometime in the future. There are many unique factors to consider when valuing any business. The following will provide some background and take some of the mystique out of the valuation process.

Typically, the market will establish a price range for a company, just as it determines a price range for products and services; however, value maximization can only be achieved when the universe of qualified and motivated prospects fully appreciate a company’s future growth and earnings potential. A critical requirement of maximizing the value of a company entails a professional and organized presentation of both tangible and intangible business attributes to potential acquirers.

The decision to sell or retain a business is a question pondered by many business owners. Selling a business is a momentous decision and involves critical analysis and contemplation. Although there are a myriad of factors that influence this decision, most of the pertinent issues fall into two primary categories: Financial and Lifestyle Considerations.

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