The Election's Implications For Selling A Small Business

Nov 12, 2012, 08:00 ET from HiddenAdvisor

CHEYENNE, Wyo., Nov. 12, 2012 /PRNewswire-iReach/ -- The 2012 presidential election is over, but concern about selling a small business before capital gains tax rates change is just getting started. Many small business owners will likely consider selling their business quickly before capital gains rates change. Their urgency collides with an unfortunate reality: most small businesses on the market never sell at all. Why? Bad valuation and poor marketing. For the first time, HiddenAdvisor helps business owners and advisors discover how real buyers look at the purchase of a small business. 


Selling a business may be the biggest financial decision business owners ever make. HiddenAdvisor provides the expert guidance and tools to ensure that selling the business doesn't become an owner's biggest mistake. 

Why do so many small business owners and advisors cling to unrealistic price expectations when it comes to selling or, in this case, never selling a business? Simply put, most owners ask the wrong question when valuing a business: how much is the business worth? Asking the wrong question results in big valuation mistakes.

Multiples and more multiples. The most common and simplest shortcut to valuing a business is also fraught with the most peril. Not all businesses and not all profits are created equal. Without the right expertise and experience (too often in short supply), using a multiple of earnings based on the sale price of other supposedly similar businesses often results in a badly misguided valuation.

Overstating the profits of the business. Owners and advisors often get carried away when "making adjustments" or "recasting" the profits of a business for sale. Higher profit leads to higher purchase price, but only when those profits hold up against the scrutiny of the buyer.

Confusing asset value with business value. Cash is king when it comes to valuing a business. Most buyers aren't interested in balance sheet totals. It is the cash flow that the business produces with those assets that matters.

The list of big valuation mistakes goes on and on, but the key to getting the right answer is asking the right question: how much will buyers pay for the business? Understanding the perspective of real buyers leads to realistic valuation expectations and small businesses that actually get sold.

HiddenAdvisor explains how real buyers value small businesses, so owners and advisors can avoid the valuation traps that snare too many sellers. 

Business owners, business brokers, business appraisers, lawyers and accountants get smart, straight-forward guidance on valuing and selling small businesses at

About HiddenAdvisor

HiddenAdvisor is the source for practical insight into how to sell small businesses – created for business owners, business brokers, business appraisers, lawyers and accountants by contributors with decades of experience buying and selling billions of dollars worth of businesses. provides a wealth of free analysis and commentary and also offers HiddenAdvisor Premium, the monthly newsletter for smart and straight-forward advice on valuing and selling small businesses. 

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Mark Little HiddenAdvisor, 3073630366,

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SOURCE HiddenAdvisor