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Business valuations key to profitability at selling time

Jan 12, 2011 Brian Bradley

Business owners considering selling their business should be aware of the important role a business valuation can play in the final price tag, writes Kristen Hampshire for SmartBusiness.com. Before executing a sale, an entrepreneur should engage in a business valuation because it may provide a clear picture as to how the business should be improved before going forward with a sale, Hampshire writes.
- Hide quoted text - “To maximize business value, owners need to develop a strategy to build institutional value,” Barry Worth, director of mergers and acquisitions at Brown Smith Wallace, told Hampshire. The business valuation will allow the business owner to see exactly which areas the most profitable, sustainable and valuable. Conversely, the report will also clarify weak points that require attention before a sale can be considered. "A proactive business valuation is about looking at the value of the company … to identify what components of the business are really driving value," Brown Smith Wallace's Bill Willbrand told Hampshire. Selling one's business can be a difficult and lengthy process. However, having a business valuation report in place long before that point can help maximize profitability on the closing price.