The top three nonfinancial factors that can drastically affect business values are management structures, diversity, and growth potential. If you’re the buyer, these factors can help you see the bigger picture outside the numbers and get an idea of what’s actually driving the business’s success. If you’re the owner, these factors can give you a sense for which value drivers are important and what levers you can be pulling to maximize the value of your business for potential buyers.
While numbers can tell you a lot about how much a business is worth, it can’t tell you everything. When considering buying or selling a business, there a number of vital factors, unrelated to finances, that must be considered.
Determining the value of a business starts with looking at several years of data to determine growth trends – monetary and otherwise. Has the company been improving, or have earnings been flat? How has the internal structure evolved? Maybe the owner has already checked out and the company has been slowly going downhill for several years. We like to call this the “glider effect,” and, unfortunately, it happens a lot.
Gliders, without the benefit of an engine, may float
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