Equipment, including vehicles, is often a significant asset for green industry businesses. The value of a business is usually determined as including the equipment necessary to operate the business. The amount, nature, age and condition of that necessary equipment will affect the valuation of the business. Therefore, demonstrating that equipment is in good condition and that it has been properly maintained is worthwhile in supporting the value of your business.
Surplus equipment should be addressed if possible before placing your business on the market. A potential buyer may believe he or she is entitled to such property as part of an acquisition while providing little or no additional consideration. You will usually get a better deal selling surplus equipment some other way. In addition, eliminating unusable old equipment is part of the general clean-up your business should receive.
Your accounts receivable may or may not be included in the sale of your business. If so, they will usually be valued in addition to the basic value of the business. Regardless, there are at least two significant reasons to have your accounts receivable in as good order as possible.
One reason is that if your accounts receivable are in disarray and there are many past-due accounts, it may raise a question in the potential buyers mind about the overall quality of the business’s revenue. The other is that if accounts receivable are to be included in the sale, a buyer will almost always discount the value of past-due receivables.
When inventories are included in a business sale, they are usually counted and valued at or near the acquisition date. Buyers will likely not be interested in acquiring excessive inventories, so continuing to carefully manage inventory levels is important. In addition, you should be able to easily document the cost of inventory.