FORTUNE Small Business:

How to value your business for a sale

Ask FSB helps a reader prepare to sell a piano school

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)

money_hands.03.jpg
Ask FSB
Get small-business intelligence from the experts. Here's a chance for YOU to ask your pressing small-business questions, and FSB editors will help you get answers from the appropriate experts.
Your name:
* Your e-mail address:
* Your city:
* Your state:
* Your daytime phone #:
* Your questions:

(FORTUNE Small Business) -- Dear FSB: How I can sell my piano school?

- Claire Alvanos, Queens Village, N.Y.

Dear Claire: In the eyes of the free market, a piano school - at least a profitable one - has the same rosy hue as any viable company that's for sale.

"It's a question of finding a person with an interest in that business," says Mel Lisiten, founder of New York business brokerage Lisiten Associates. "The rest of it is all the same. Business is business. Numbers are numbers. Bottom line is bottom line. It's quite simple."

The only caveat: if the owner is also the sole teacher, expect a difficult sell, said Lisiten. In such a case, the piano instructor's only real option would be to sell his "book of business," basically the client list, to another teacher. Consequently, the value of the "school" would be a fraction of what an actual company with employees would have been worth.

Those running larger operations can either hit the market themselves or use a business broker. The choice depends on several factors.

"Owners should try and sell the business themselves if they feel they have the time and knowledge to do so," said Peter Siegel, founder of the online business market site bizben.com and author of Businesses for Sale: How to Buy or Sell a Small Business.

On top of their normal day-to-day work, self-selling owners would need to take calls from potential buyers and show them the business, advertise the sale, and enlist an escrow company, lenders, attorneys for contracts and more. Siegel said that piano schools typically sell for a 1.8x to 2.3x multiple of their adjusted net income, which is the total amount of money made by the business.

The Internet has plenty of helpful resources. You can list your piano school at one of the many online business markets (Check out our article on "Fresh ways to find buyers"), such as bizbuysell.com or businessforsale.com.

Siegel details the 12 crucial steps to selling a business and valuing a small business for sale on the website of the Senior Corps of Retired Executives (SCORE). And this ASK FSB provides more information on selling your business for the highest price.

Those choosing the broker route can check out Ask FSBs for tips on how to find the best broker and how to sell a million dollar businessTo top of page

Do you have advice for how Claire can sell her piano school? Talk to us.

Selling your business? Click here: A new marketplace hopes to become a one-stop shop for entrepreneurs buying or selling a business.

How to value the worth of your business

The secret to selling a business for top dollar

Mistakes to avoid in selling your business
Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
My part-time job is a dead end, but it's all I can find CNNMoney profiles 4 of America's 7 million part-time workers unable to find full-time jobs. More
Cool cars from the LA Auto Show There are some of the standout vehicles on display this year at the Los Angeles Auto Show. More
American Dream homes: Prices in 10 cities How much does the American Dream home cost? From $2 million in Los Altos, Calif., to $65,000 in Cleveland, here's what you'll pay for a 4-bedroom, 2-bath house, according to Coldwell Banker's annual survey. More


Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.