84 per cent of businesses that are listed for sale do not sell. The single biggest reason a business doesn’t sell is because the value is unrealistic – that is, either the business has been overvalued or the business has been undervalued.

Overvaluing or undervaluing your business will result in a less than satisfactory outcome. Do not make the error of being overconfident and valuing your business based on all the hard years you have put in, or the amount of money you need to pay off your debt or retire on. Perhaps you’ve heard stories about someone achieving huge sums for a business, but remember – these stories are more fiction than fact and usually a back-story exists that hasn’t been told and which makes the deal less than attractive.

Get expert advice from a qualified and experienced advisor. If you undervalue your business, prospective purchasers could believe something is wrong with the business. The value of your business is based on what is left after you have left, and getting this value right is hard. However, your business will sell quickly if it is priced correctly.

Obtaining the best sale price often starts with the valuation you place on the business. A business owner who has worked hard for over 20 years and taken the business from nothing to a good sized business may value the business based on an emotive 20 years of hard work. A more rational approach is set a price for what the business is worth today. Similarly, a value could be based on the business owner’s wish to pay off a loan and have enough to live comfortably, but does this truly represent the price a purchaser is willing to pay?

Realistically, the value of the business amounts to a number that represents assets, goodwill and future earnings, combined with market conditions, location, industry and the amount a buyer is willing to pay.