Value a Manufacturing Business: Use Asset Calculation
If you want to value a manufacturing business, you must calculate business valuation by valuing the manufacturing business assets.
A valuation is an assessment of the net worth of a company. In any business, there are assets, which are properties, equipment, and other revenue-generating entities. Liabilities are costs incurred by doing business. The asset-based approach calculates a company’s value as its assets minus its liabilities. The asset approach helps value a manufacturing business, as these are typically asset-intensive operations.
A question that most manufacturing owners in California ask: if I sell a business how much tax will I need to pay?
Value a Manufacturing Business
When determining the worth of a manufacturing company using the asset valuation method formula, there are several important factors to consider:
- Trends in sales and profitability
- Years in business
- Equipment condition and age
- The number of products produced
- Capacity constraints
- Inventory on hand and work in progress
- Raw materials
- Rented or owned property
Find Out What My Manufacturing Company Worth
Before you consider selling a manufacturing business, there are a few things you can do to make it more appealing to potential buyers:
- Invest in patents
- Various sources of income
- Management of operations
- Market trends and new technology
Hiring a Manufacturing Business Broker
A merger and acquisition advisor or a manufacturing business brokerage firm is a company that specializes in guiding manufacturing business owners through the complex process of business acquisitions and sales. They can help you determine the adjusted net asset value of your business and also make the process more manageable in the following ways:
- Use your resources efficiently
- Identify and evaluate potential buyers
- Managing the financial responsibilities of closing the sale
Successfully Valuing and Selling a Manufacturing Business
Valuing your manufacturing business can be difficult, but it is necessary to successfully sell it for a fair price. There are numerous valuation methods, but the best for a manufacturing business is the asset-based approach.
If you are considering selling your business, this process can feel overwhelming, so having the expertise of a business brokerage firm can be very helpful.
Choose a group with plenty of industry experience and a strong track record of successful business acquisitions and sales to ensure your transaction goes through without a hitch.
Go to the next article: Part of tips to selling a manufacturing business in California series ->