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Independent valuation and price negotiation

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It can be difficult to resist the allure of a business for sale at what appears to be an excellent price for the potential buyer.

However, to proceed without asking questions through an independent valuer is foolhardy, as there may be all kinds of hidden financial and legal booby-traps hidden beneath the surface.

Unlike a qualified professional, you won't have access to data that is essential in order to assess the business. Neither will you possess the expertise required to make a sound statistical analysis of the company's trading position. 

Analysis

The analysis of a business's health is complex, and you may require the help of more than one specialist. They could be in the legal area, or a financial expert, or a business guru, but whichever you choose, conduct a background check to establish to your own satisfaction that they are up to the job, especially if you decide to find one on the internet. Finding specialists via word of mouth or recommendation is probably the safest route, but if that isn't possible, search on the internet to find opinions or experiences of other people. 

When employing a specialist, be aware that you can ask for different reports containing differing levels of detail. More detailed reports cost more. The most fundamental type of report may only contain an elementary valuation of a business and its assets, while something more comprehensive may look at outside factors and the wider market, assessing their impact on the company's value. The valuer should give his assessment of the company's worth alongside all the relevant facts and figures.

Professional audit

A professional audit will uncover such things as debts and current lawsuits, as well as an analysis of the company's past history. The latter will indicate if the company has been trying to make the business seem more attractive by striving for short-term profits during the past few months.

 Apart from the written details of the report, a talk to staff and clients may reveal other things about the state of the business.

Apart from the written details of the report, a talk to staff and clients may reveal other things about the state of the business.

While the business's current situation is important, the specialist should look towards future prospects and potential, as a healthy business now may be going to experience hard times ahead, and vice versa. In addition, they should also look at intangibles such as the skill and knowledge of the staff, and the client list.

When you have all the relevant details, your negotiating position will be stronger, and the specialist knowledge you have paid for should save you more than you might otherwise have spent without it. 


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