Selling a busines

[Doc Bernard]

I am contemplating selling Indie Arms. Where would you advertise this? And how do you figure a value? Obviously durable items such as props, uniforms, etc. have a hard cost that is easy to figure out. Same with the website.

But what about potential and reputation? Does that figure into the cost?

 

[Kegan]

It absolutely figures into cost. How much and how you do it, I'm not sure of. Finding a valuation for your business just sounds expensive to me, but it may be worth looking into if you're seriously considering it and believe it would be of benefit to your sale.

I know this doesn't help much, but I'd look into a company that does it rather than try to guess projections yourself (unless you've been doing Indie Arms' sales projections and the like for a while now).

Kegan

 

[Doc Bernard]

That's the hard part. There aren't many companies like mine.

 

[ggrantly]

Doc,

Here are a few standard guidelines for selling a business.

First: determine a fair market value for your assets such as machinery, property and inventory. Be realistic.

Second: Does your business make a profit? Does it make a consistent profit? Determine your profit after you pay all your overhead, including paying yourself a reasonable wage. Take that profit (dividend) figure and use a multiplier of between 3 and 5. If it is a well established and always profitable business, use the higher number.

Third: Add the fair market value of your inventory, property and machinery with the multiplied profit figure and you will have a ball park figure.

Now a question, and I have been in this exact position more than once with my own businesses; can this business run without you? Are you the business? If someone buys a 7/11 franchise, or a BurgerKing, the new owner has an expectation that the business will run itself and continue to make a profit if left alone (more or less). If your business would collapse without your knowledge and daily input, then it will be a real hard sell.

For a unique business like yours, you might try doing something with your employees.

Grant

 

[ggrantly]

Also,

You might try seeking the council of a "Small Business Development Center". These types of organizations often reside on university campuses and will do research projects, like yours, often with the help of students. These can be very effective.

SCORE is another option. Service Corp of Retired Executives.

Grant

 

[mainstreetprod]

What Grant said, except that the multiplier I've seen used is 1 to 3 rather than 3 to 5. And my personal experience in selling a business (a coin laundry chain) was , as it ended up, a multiplier of slightly under two.

 

[RyanT]

All the times I hear about business being bought and sold within the film industry, it's all by word of mouth. Tell your employees and other people who you might work with that you're thinking about selling your business. They're going to be the ones with the knowledge to run it, and I'm sure there will be someone who will wants to move up and take things over.

 

[Doc Bernard]

Thanks for the advice. Due to some very good friends......I am not having to move out of CA. I get to keep Indie Arms and continue the dream, while working in the industry called film.

 

[Aweitzel13]

+1 for what Grant said. Typically, in a service industry the multiplier will be between 1 and 3 (and in this economy it's likely going to be closer to 2 or less), while a manufacturing type of business or hard-asset business would have a multiplier closer to something between 3 and 5. The amounts will also change if it is a cash deal or if the seller is going to carry back the financing.

Also, when looking at numbers, always use tax numbers rather than book. The SBA only looks at tax numbers because they figure that anyone who would lie to the IRS would lie to the bank when it comes to profitability.