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#1 How to prepare your business for the sale - view tip
#2 Maximize business value with marketing - view tip
#3 Prior to announcing the sale - view tip
#4 To whom to sell your business - view tip
Careful planning is critical on timing your sale - view tip
What is your company worth? - view tip
Cash determines price — the higher the cash flow, the higher the asking price - view tip
3 out of 4 businesses that are listed for sale will not sell - view tip

Sales Tip #7

cash determines company price

The Higher the Cash Flow, The Higher the Asking Price

The asking price for a company can be determined by several factors, such as the:

  • value of your assets
  • value of your market reach
  • value of your goodwill
  • value of your location
  • value of your technology

But the underlying factor that supports the asking price — regardless of the perceived market value of the business — is the sustainable cash flow that the business generates. This about it!

What the Buyer Looks At

What does the buyer need to support their decision to pay the asking price for your company? Enough cash to:

  1. pay the buyer's salary
  2. pay the financing costs to purchase the business
  3. return a minimum investment for the down payment
  4. generate working capital to grow the business

These are the minimum requirements. Thus when your business generates a higher cash flow, the higher your asking price

We have more information about pricing strategies

Contact us

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Krayton M Davis
Executive Director, Novars Group, Inc

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