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From the monthly archives: October 2012

We are pleased to present below all posts archived in 'October 2012'. If you still can't find what you are looking for, try using the search box.

How is Inventory Handled in the Sale of a Small Business?

Inventory (stock held for resale) is a significant part of the tangible assets of most businesses. It is customary to include a normal inventory level in the purchase price of a business for sale that can sustain current revenues being generated by the business.

Just as tangible assets like machinery and equipment are included in the purchase price of a business for sale, the same holds true for inventory. Such assets as these are needed to generate the profit upon which the business is valued.

If a buyer is required to replenish the inventory or purchase additional equipment after purchasing the business, this additional working capital requirement would need to be taken into consideration prior to the initial valuation of the business if the sale is to be successful.

The agreement that both the buyer and seller sign into contract for the purchase of the business usually outlines the details of how inventory will be handled. The following are several aspects of inventory that are usually covered:

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Increase the Value of Your Business – Document Your Marketing Plan

An articulated, working marketing plan is a sign of an organized business and provides a roadmap for a new owner to follow. A marketing plan that is tailored to reach a defined target audience instills confidence that growth can be achieved in an effective, predictable manner under new ownership. In other words, by increasing the probability that the business will continue to perform and grow into the future, the risks associated with acquiring the business are significantly reduced in the eyes of prospective buyers. Less risk means a better value. Therefore, the efficiency with which you attract customers will increase the purchase price paid for your business.

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