Paul G. Hauf And Associates Answers Your Questions: “How Do You Value A Business?”

When an “entrepreneur” wants to sell a business, Paul G. Hauf And Associates suggests that he or she turn to a professional, business brokerage firm before deciding on a sales price. One of the many brokerage responsibilities of Paul G. Hauf And Associates is to accurately “value” a business for sale purposes. This service requires the careful and expert analysis of a trained professional.

According to Paul G. Hauf And Associates, valuing a business is a highly complex task. The professional brokers of Paul G. Hauf And Associates break this task down into three, major components. The first step is to consider the “tangible” assets of the business. These assets include the furniture, fixtures, equipment and inventory of the business as well as the amenities and location of the business itself.

When valuing a business, Paul G. Hauf And Associates will also carefully look at the “intangible” assets that the business has to offer. Intangible assets are not physical, and they can’t be moved in a truck like tangible business assets, explains Paul G. Hauf And Associates, but they can either “add” to…or “subtract” from the value of a business. Intangible assets include a business’ history, its customer list, existing customer contracts, name recognition and other factors.

Lastly, the business brokers of Paul G. Hauf And Associates assess the “cash flow” of the business for sale. The cash flow is the net profit that a business generates per year after all expenses are taken into account. The cash flow figure is of considerable interest to a potential buyer because it provides a reasonable idea or expectation as to the business’ “profitability”.

Only after Paul G. Hauf And Associates has fully analyzed a business, through all three stages of the review process, is it then possible to establish a market value. In the final analysis, sellers should bear in mind that quantifiable assessments like the value of business assets and cash flow can only be used to predict so much. In the end, the market is made up of people pursuing their own interests and wishes. Despite the most thorough analysis, a business is only “worth” as much as a person is willing to “pay” for it.