David Anderson is principal of David Anderson & Associates, a Philadelphia forensic accounting firm that provides a full range of fraud investigation, fraud deterrence programs, and forensic accounting services in Philadelphia and the Delaware Valley.
Selling a house is an important decision, one that’s not made capriciously but undertaken only after solid research and planning and consultation with industry experts.
Selling a business is a very similar process. You’ve invested time, money, and sweat equity into your company and you want top dollar when you put it on the market. As you do your research and make your plans, strongly consider working with a forensic accountant experienced in business valuation to maximize the benefits of the transaction.
“Whether selling a house or a business,” said David Anderson, principal of David Anderson & Associates, a Philadelphia forensic accounting firm providing business valuation services in Philadelphia and the Delaware Valley, “you must understand the value of what you are selling. Hire a good broker, have your records and physical structure in order, and be prepared to address issues or questions from potential buyers.”
Anderson, a forensic accounting expert in Philadelphia who also is a Certified Valuation Analyst, offers these guidelines to help business owners prepare for a sale:
Determine the Worth of Your Business
To make sure your expectations are realistic, you need a reasonable idea of what your business is worth, Anderson said.
“Unfortunately, websites like Zillow that cater to home sales don’t exist for the sale of businesses and there simply aren’t other readily available sources to provide you with that information,” said Anderson, a business valuation expert in Philadelphia whose company offers a full range of forensic accounting services in Philadelphia and the Delaware Valley. “Your best bet is to use a professional business valuator.”
Anderson said most businesses don’t need a full business valuation, but can instead use a less expensive calculation of value to get a general idea of what their business is worth. However, Anderson, a Certified Valuation Analyst and forensic accounting expert in Philadelphia, said while a calculation of value may be less expensive, it also is less reliable than a full business valuation, and generally cannot be used in litigation. It is a perfectly reasonable tool to use to determine the worth of a business, but, he said, the business owner needs to understand its limitations.
Find a Good Business Broker
Unless a business owner has extensive industry contacts and experience in selling businesses, Anderson said sellers should work with a business broker.
“Just as you would do with a real estate broker you hire to sell your home, you’ll want to interview the business broker. Check references and have the broker analyze your business before you agree to hire them,” said Anderson, whose company specializes in business valuation services in Philadelphia and the Delaware Valley.
Get Your Books and Records in Order
This is a crucial step in the process, Anderson said, because your business broker and any potential buyers are going to want to examine your books and records as part of their due diligence.
“Just as you would get your house ready for showings,” he said, “you need to do the same for your books and records.”
Among Anderson’s recommendations: Collect financial statements, general ledgers and income tax returns for the past five years; secure copies of all leases, contracts and agreements; and gather organized documentation of any intangible assets or intellectual property. Business owners also must assure their books accurately reflect the financial position of the company, he said. This includes writing off old accounts receivable, adjusting inventory for obsolete and slow-moving items, removing retired fixed assets from the books, making sure all liabilities and debt are accurately reflected on the books, and identifying non-business and/or one-time expenses that have been recorded.
It’s often a good idea to have an independent expert, such as a forensic accountant, review your books and records to make sure you haven’t missed anything, said Anderson, a Certified Valuation Analyst and forensic accounting expert in Philadelphia.
Get Your Business Premises in Order
Beyond the books and records, Anderson said business owners should take a critical look at their actual business premises. Among his recommendations: Straighten up and organize; dispose of obsolete inventory, old furniture, and retired equipment; make repairs and perform maintenance so the facilities are in working order and look fresh; and be sure you have keys to all locks.
“These are the same things you would do when you are selling a house,” said Anderson, a business valuation expert in Philadelphia who specializes in providing a full range of forensic accounting services in Philadelphia and the Delaware Valley. “Making sure your physical premises are in top shape will help you get the best possible price for your business.”
Prepare for Questions
Anticipate what buyers will ask and have the answers ready, Anderson said. “This will speed up the due diligence process and impress buyers by showing them you truly know your business,” said Anderson, an expert in business valuation services in Philadelphia. “Be prepared to discuss employees, customers, vendors, products and services, industry trends, and your vision for the future of the business.”
If you require the services of a Certified Valuation Analyst or any other forensic accounting services in Philadelphia and the Delaware Valley, please contact the Philadelphia forensic accounting firm of David Anderson & Associates by calling David Anderson at 267-207-3597 or emailing him at david@davidandersonassociates.com.
About David Anderson & Associates
David Anderson & Associates is a Philadelphia forensic accounting firm that provides a full range of forensic accounting services in Philadelphia and the Delaware Valley. The experienced professionals at David Anderson & Associates provide forensic accounting, business valuation, fraud investigation, litigation support, economic damage analysis, business consulting and outsourced CFO services. Company principal David Anderson has more than 30 years of experience in financial and operational leadership positions and is a Certified Public Accountant, a Certified Fraud Examiner and a Certified Valuation Analyst.
