Selling your business? First, know it...

Selling your business? First, know its value

There are 2 comments on the Newsday story from Aug 25, 2008, titled Selling your business? First, know its value. In it, Newsday reports that:

You're thinking of selling your business but aren't quite sure it's the right time, considering the economic climate.

Join the discussion below, or Read more at Newsday.

Frank D Thomas CPA CVA

United States

#1 Aug 26, 2008
Many business owners manage their business to minimize income taxes. If they wish to sell their business in the next few years, they should reconsider this strategy and plan on the business showing a respectable profit. After all, a potential buyer wishes to purchase a profitable business. Showing a larger profit may mean that the business owner will pay more income tax in the short run. However, they should realize a higher price when the business is sold.
Frank D. Thomas, CPA, CVA
Stephen Kirkland

Elgin, SC

#2 Sep 9, 2008
When estimating the value of a business, the owner's compensation often needs to be adjusted or "normalized." A small adjustment in that expense can make a large difference in the value of the business, once the appropriate multiple is applied to normalized earnings. For more details, see:

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