Selling your boomer business: What’s it worth?
I have seen this over and over as I help young professionals buy practices: The owner of the practice (often a baby boomer) invariably overvalues the practice.
Here is the scenario: You have worked hard to build up your business over 20- to 30-years, in order to leave it to your children (who it turns out don’t want it) or to sell it to finance your retirement. So you value it at what you think it’s worth, including all of your “sweat equity” (I hate that term).
The value for your business is this: A willing buyer and a willing seller, who agree to a price that is mutually uncomfortable for both. I love this definition! My husband created the “mutually uncomfortable” thing, and I agree. It means neither party thinks he/she got “taken,” and neither party thinks he “stole” the thing. Both parties feel a little uncomfortable (I think I sold my business for just a little too little, but it’s ok; he thinks he bought it for a little too much, but it’s ok.)
In other words, the value of a business is what the parties think it is. Sure there are some “rules of thumb” for such things. For more information, see my About.com article on Valuing Your Business for Sale.
I’d love to hear about your experience buying or selling a business.