Tip #119: What Happens to Your Assets When You Sell Your Business?

Tips for Calculating the value of your business assetsIf you’re planning to sell your business, you may think that it isn’t worth it to update or maintain your equipment. However, that is far from the truth!

If your business requires equipment to run, the tools you have will add value to your company. However, don’t think that if you have a warehouse full of broken or outdated equipment, you’ll be raking it in. You’ll need to keep it in shape with regular maintenance and updates as needed.

What is Considered an Asset?

Most often, furniture, fixtures, and equipment used in your business are considered tangible assets and are used to assess the sale price of your business. When your business transfers to the next owner, those assets should be clear of any outstanding debt. It’s not uncommon for the debt to be paid off at the closing.

Typically, cash, or things like bonds or money market funds, are not included in the business sale, but are kept by the seller. As far as inventory is concerned, including a normal level of inventory with the business sale is what’s commonly agreed upon. On the day of the business sale, the inventory is assessed, and adjusted up or down as needed.

Assess Your Assets, Make Any Necessary Updates, and Document Everything

As part of your sales prep process, it’s a good practice to take inventory of your tangible assets. You should make any necessary repairs on the equipment you have, and any that can’t be used should be sold or discarded.

Then, take your list of tangible assets and have an appraisal done, so you can present that figure to potential buyers. If it’s in good shape, that could attract buyers and add value to your business!

However, keep in mind, there is no universal rule regarding which assets are included in business sales. It’s important to document your assets and be very clear about which are to be included.

If you need help taking inventory of your equipment, the experts at The Bridlebrook Group will help. To get started, contact them online or call 610.325.7066.