Case study: business valuation when selling a business
Ronda is an owner-operator of a small cafe business. She has been running it for the last 15 years and now considers retiring and selling the business.
Ronda is unsure how much her business is worth and what price she can advertise it for.
Ronda engages a business valuer to estimate the fair market value of the business. The valuation specialist performs a business valuation and estimates the business value in the range of $100,000 to $150,000.
While performing the business valuation, the valuation specialist discovers a number of areas which can be improved and drive the business value up. He offers Ronda to supplement the business valuation report with a business value enhancement brief suggesting areas for improvement and demonstrating how this can drive the business value up.
Ronda decides to continue working in the business for a while longer and implement a number of business improvement initiatives suggested in the business value enhancement brief. After the value enhancement initiatives are implemented, the business performance improves and the business value increases. Ronda is now able to sell her business for a higher price.
By Julia Podgorbunskaya, CPA, Senior Business Valuer at Professional Business Valuers
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