Most people try to sell their companies on hype and it doesn’t work. When you have a potential investor, or lender, who knows what they’re doing, you will not get them on hype. You’ll get them on fundamentals, and you’ll get them on numbers.

Understanding everything we’ve covered in the previous section will help you understand how to sell a company.

If you can demonstrate consistently favorable trends in the ratios we’ve gone over, then you can demonstrate a company that is financially healthy, and well managed. That’s what an investor or lender wants to see.

The next thing an investor or lender want, is to feel confident that they will get their money back. In the investor’s case, they recapture their investment, and then they start seeing an ROI (Return on Investment). It’s the same thing we looked at when we looked at ROE (Return on Equity) only in this case, we are looking at it from the perspective of an outside investor. We look at only their share of the net income, compared with their share of the equity – what they’ve invested in their business.

Investors want to know that their investment is performing well.

When you buy stocks, you want the stock price to go up. When you invest in a small business, the value of the equity section of the balance sheet is the stock price. That’s what needs to go up, to make the investor happy.

In this video I’ll show you how to prepare a simple financial model that demonstrates, how to arrive at the valuation of your company, based on projected numbers that are realistic, and based on an ROI for the investor that makes the deal attractive.

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