My mantra to the person wanting to sell their business: “If your business is not performing today as well as it can and you can wait, do wait (to sell.)”
However, for some waiting is not an option. There are dread diseases that threaten the business owner or her family. There are long awaited retirements. There are other desired business opportunities that cannot wait. The current owner may not see how to pull the business out of the hole and has no patience to explore it further. The list goes on.
In these very real examples of reasons a sale must happen now, what are the options for the business owner?
Answer: It depends.
1) If there is cash flow enough today to develop a value greater than the current-state value of the hard assets of furniture, fixtures, and equipment, and cost value of inventory, put it on the market at the true value today.
2) If there is some cash flow but not as much as is indicated in #1, it is possible, but much less likely, to sell the furniture, fixtures, and equipment at some reduced value and inventory at cost, marketing the business in a different fashion.
3) If there is no cash flow, there is much less chance the business will sell. Someone may be willing to buy the assets at some rate, a rate considered liquidation. Bizbuysell.com (and perhaps others) has a special section for this type of sale.
To give further perspective to the high value of the cash flow of a business visit these links
http://www.articlesbase.com/sales-articles/selling-a-business-with-no-assets-1173988.html
http://www.reuters.com/article/idUSN1837254320080618
The business owner wanting to sell her business is far better off waiting to sell and building value by building cash flow than selling when cash flow is off or non-existent. However, if moving forward is the only answer, prepare for selling the hard assets at a much-reduced rate. An economy such as we have now (late 2010) further deflates the value of the assets.
