State Budget Deficits Could Impact Your Business' Valuation
Does your company do business with state or municipal governments? If so, ballooning deficits could be harmful to your financial health. With economic growth expected to remain weak, state and local officials will have no choice but to evaluate all their contractual obligations. Their goal will be to save money by renegotiating existing contracts and require re-bidding of contracts on a more frequent basis. What does this mean for business owners who are planning to sell their businesses in the near future? If a material portion of your company’s revenues are related to state or municipal contracts, your gross profit margin probably will decline or even worse, you might lose significant business. Lower profitability will end up reducing your company’s valuation at the worst possible time. Business owners desiring to sell their companies in the near-term, and who have material exposure to the aforementioned contracts, should consider accelerating the timing of the sale of their business. By doing so, the owner might be able to pass-off some of these risks to the buyer and thereby salvage a higher valuation.
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Posted by MergerMaven at 11/17/2010 10:03 AM 
Categories: Advice
Tags: valuation business valuation mergermaven blog higher valuation sell their businesses state budget de
Categories: Advice
Tags: valuation business valuation mergermaven blog higher valuation sell their businesses state budget de
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