Necessary cookies are required to enable the basic features of this site, such as providing secure log-in or adjusting your consent preferences. These cookies do not store any personally identifiable data.
Functional cookies help perform certain functionalities like sharing the content of the website on social media platforms, collecting feedback, and other third-party features.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics such as the number of visitors, bounce rate, traffic source, etc.
Performance cookies are used to understand and analyse the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Advertisement cookies are used to provide visitors with customised advertisements based on the pages you visited previously and to analyse the effectiveness of the ad campaigns.
Many business owners assume that if their company is worth a lot on paper, selling it will be easy. However, business value and sellability are not the same. Business value is how much a company is financially worth, while sellability is how easy it is to sell. Some businesses have high value but struggle to attract buyers. Others may be easy to sell but not worth as much as the owner expects.
Understanding the difference between these two concepts is key for anyone planning to sell their business in the future.
Business value is based on how much a company is worth in terms of its profits, assets, and market position. A company with strong sales, high profits, and valuable assets is usually worth more. Other factors, like a well-known brand, a loyal customer base, and unique products or services, can also increase value. Businesses in growing industries tend to be worth more than those in struggling markets.
Buyers and financial experts use different methods to calculate business value. Some look at annual profits and multiply them by a specific number. Others focus on the value of physical assets, like buildings or equipment. While having a high business value is important, it does not always mean a business will sell quickly.
Sellability refers to how attractive a business is to potential buyers. A business that runs smoothly without the owner’s constant involvement is usually easier to sell. Buyers prefer companies with well-trained employees, clear processes, and reliable customers. If a business depends too much on the owner, buyers may worry about keeping it successful after the sale.
Market demand also plays a big role in sellability. Businesses in popular industries with strong future growth potential attract more buyers. On the other hand, a business that is difficult to run, operates in a shrinking industry, or faces legal risks may struggle to find interested buyers, even if it is financially valuable.
The best-case scenario is when a business is both highly valuable and easy to sell. Businesses with steady revenue, simple operations, and a strong customer base are attractive to buyers and maintain high value. A company with clear financial records, low risk, and a strong team in place is more likely to sell quickly and at a good price. Owners who focus on keeping financials organized and ensuring smooth day-to-day operations increase both value and sellability.
Not all high-value businesses are easy to sell. Some rely too much on the owner, making buyers hesitant. If a company depends on a few key customers or has unpredictable revenue, it may be risky for a new owner. Buyers also consider industry trends. A business in a declining market, even if profitable now, may not seem like a good investment for the future.
Business owners who want to sell in the future should take steps to make their company both valuable and sellable. This includes:
Business value and sellability are closely related, but not the same. A company may be worth a lot but difficult to sell due to operational challenges or industry risks.
Owners who plan to sell should focus on improving both aspects by making their business easy to run, financially stable, and attractive to buyers.
Taking these steps in advance increases the chances of a successful sale at the best possible price.
If you’re considering selling your business, reach out to the experts at Murphy Business – Emerald Coast. With their experience in business sales, they can help you navigate the complexities and guide you to make the right decision at the best time. Contact them at (850) 374-8884 or complete their contact form to get started on your business succession journey.
