In this interview, we discuss exit planning, business appraisals, valuations, normalized salary, working with a CPA, Business appraiser, and Attorney, and more. Dr. Horton has owned, operated and started several high tech businesses in the past twenty-five years and has many years of experience performing forensic accounting on seller’s financials, analysis of financials during due diligence phase of acquisition and business valuations.
Key Points from our Conversation
- The only way to set the price [of your business] is to perform a business appraisal.
- If you are selling a business, a broker who has been trained if performing valuations will suffice. Otherwise you will need a certified business appraiser.
- Selling a business requires three years of financials statements plus, for each year, a list of personal or owner benefits you have received from the company.
- In any case, if the Seller finances a large part of the acquisition then he or she should be prepared to take the business back in case the buyer defaults. If the Seller is not prepared to do that then he should not extend Seller financing.
- It is important to use your lawyer to deal with drafting and analyzing the legal documents.