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Determining the right purchase price for your business

On Behalf of | Jan 25, 2024 | Business Law |

When it comes to selling your business in Alberta, setting the right purchase price is crucial to attracting serious buyers and closing the sale. However, it can be quite complicated, so it can help to know where to start.

Assigning value

Valuing a business is both an art and a science, and different approaches can yield varying results. Generally, though, it requires a thorough analysis of your company’s financials, including:

  • Revenue streams: A diverse mix of reliable income sources can increase the appeal of your business.
  • Profit margins: Healthy margins often translate to a more attractive purchase price.
  • Growth potential: Buyers pay for future prospects, not just current performance.

Beyond these numbers, you must also consider less concrete data, such as market conditions in Calgary, the unique value propositions your business offers and the competitive landscape.

Calgary’s market pulse

Local economic factors play a significant role in determining the right price. Therefore, valuations should reflect Calgary’s business climate, industry trends and the economic forecast.

Thus, when setting your price, consider the following:

  • Review comparable sales in Calgary to gauge market expectations.
  • Factor in the uniqueness of your location and customer base.
  • Be realistic about the current economic climate and its impact on business valuations.

These considerations can have a dramatic impact on your valuation and the sale of your business.

Setting a price that is both competitive and fair could also involve hiring a professional with experience appraising businesses in this market. These parties can have the knowledge and insights into this process to help you navigate the complexities of selling a business.

Putting the pieces together

Setting the right purchase price for your business is critical in making this complicated transaction easier. By understanding Calgary’s value drivers and market conditions and seeking professional advice when needed, you can position your business for a successful and profitable sale. 

Remember, the right price reflects not only the worth of your business but also the opportunities it presents to the new owner.

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PMR Law have been named the winner of the Business Law Firm of the Year 2017 Canada by CV Magazine and the Global 100 Excellence Award as Firm of the Year (Litigation Counsel) Canada. These awards are much appreciated by the firm. In everything we do, we strive to provide the best service for our clients.