Name Your Price

Imagine a stranger walks into your company carrying nothing but a cheque book and asks to buy your business. What’s your number? How many zeroes would the cheque need to have for you not to show up for work tomorrow?

Instead of using retirement as your anchor, figure out what your business is worth and then ask yourself what the opportunity cost is of not selling now.

First, let’s look at how you can arrive at a sound estimate. Start by buying lunch for three mergers and acquisitions professionals or business valuators who specialize in your industry. For the cost of three lunches, you’ll get a good sense of what a buyer will pay.

Opportunity Cost: Money
Take a close look at the numbers. Let’s say you assume you can net $2 million after tax. Could you deploy $2 million of your capital in other investments that would either be safer or offer a better return? If you’re fairly sure a diverse portfolio of stocks and bonds will earn six or seven per cent over the long run, yet your business will give you only two or three per cent, you own an under performing, extremely high-risk, undiversified portfolio of one stock.