How to Price a Company

Question:

I own Killer Salsa, a Gardnerville, Nev., refrigerated, shelf-stable, salsa company. I would like to sell the business in the next few years. However, I have no idea how to go about doing so or what price to put on it. I have contacted our local real estate brokerage and they have been no help. Could you steer me to someone that could give me some help, or at least give me a value for my business? —Frances Pritchard, Gardnerville, Nev.

Answer:

Because you have a few years to go before selling, start working on getting your business in shape now. You may need to revise your financial statements, renegotiate leases, vendor and employee agreements, as well as pay all back taxes and other outstanding debts. You might also need to spruce up your company's overall operations and make repairs. For more guidance on what to do, approach a business broker. This person can also help you sell the company and arrive at an accurate valuation, says Anthony J. Citrolo, a principal at New York Business Brokerage, a business brokerage firm in Melville, N.Y.

If you’re just looking for a business valuation, find a professional at National Association of Certified Valuation Analysts, Citrolo says. (For our story on preparing a company to sell, click here.)