What’s a Var business worth?

Over the last year or so I’ve spoken to a number of Vars who are confused on how to place a value on their business. They’re not sure what steps to follow and the information they need that is critical to the sale process. The biggest challenge is determining a true EBIDA as one of the factors for establishing a price. As a result of conferring with companies that have purchased Vars and other relatable businesses I’ve developed a step by step process map, due diligence checklist, pro forma and the documentation for both buyers and sellers.

The goal of the seller is to maximizing the value of their business while for the seller the return on investment is the key factor. It doesn’t have to be a confusing process if our organized with a well thought process in place.

Here are some key preliminary questions for sellers:

  • Do you any internal employees that are candidates for buying your business?
  • Have your key people been informed of your plan and are they for the operational transition?
  • Do you anticipate the departure of any key personnel?
  • Has the buyer been open on the formula being used to value your business
  • Are you assured their service standards will provide the high quality service they are accustomed?

Preliminary questions for buyers:

  • Have they experienced consistent growth for the past three years?
  • Have they lost any significant clients the last three years?
  • Do they have any pending legal issues?
  • Do they have any strong market niches?
  • Are their key people a potential asset to your business?

Send me message if you would like more detailed information.