Part of the process again relates to accounting and sales records. Do you follow proper bidding and estimating policies? Do you have job accounting records that reflect revenues and costs? Do you have marketing and sales activities documented for future reference? Do you hire and retain the best people available? Can you demonstrate that customers call the company and not an individual?
The more your company reflects these concepts and policies, the easier it is to put a value on the company. For smaller sellers, it will be tough to comply with these points, but that is no excuse for not having a set of books and records prepared according to industry standards.
By now, you probably noticed there has been zero discussion about pricing methods. We can get into that at some future time. All you have to keep in mind regarding pricing is that a buyer is purchasing future cash flow — cash flow to pay you out and to earn a reasonable return after taking an industry standard salary. How you help him/her make that happen will determine how soon you can get out of the business, and how much you will get for it.
Garry Bartecki is director of dealer/distributor services at BDO Seidman, LLP of Chicago, as well as a consultant to the AED. He has also worked as an independent CPA and consultant to equipment dealers. He can be reached at (312) 616-4677 or email@example.com.