---
title: Top Things to Understand Before Selling Your Business
description: One of the most stressful parts of selling your company is the valuation – the process that puts a dollar-value on all of your hard work.
---

[The Great Game of Business Blog ](https://www.greatgame.com/blog)

# [Top Things to Understand Before Selling Your Business](https://www.greatgame.com/blog/the-great-game-of-business/rockstar-company-valuation-understand-selling-business)

 Written by [Matthew Garrett](https://www.greatgame.com/blog/author/matthewgarrett) | Aug 8, 2015 1:00:00 PM

 

If you’re considering selling or transitioning out of your company, you’ve certainly worried about the future of your organization.

One of the most stressful parts of selling your company is the valuation – the process that puts a dollar-value on all of your hard work. Here are the **three** **levels of valuation** you should understand before selling your business:

<https://www.greatgame.com/hubfs/Imported_Blog_Media/gathering-of-the-games-speaker-01.png>

1. **The reduced valuation:** Most businesses that get a reduced valuation are disorganized or progressively declining. These are some contributing factors: 
     - Poor accounting
     - Poor record keeping
     - Potential liability, typically referring to a history of unethical decisions evident in financial statements, lawsuits or other business dealings
     - Declining revenues
     - Declining gross margins
2. **The enhanced valuation:** This will show that your business is better than your competitors. Here are some examples that give businesses an edge: 
     - Gross margins higher than the industry average
     - Inventory turns higher than the industry average
     - Profit higher than the industry average
     - Conservative balance sheet management
3. **The “Rockstar” valuation** (the one you want!): To get to this level, your business must have a unique market position and a unique ability to create opportunities for shareholders and customers. Examples include: 
     - Growing revenues and profits of at least 15 percent per year for three consecutive years
     - Use of technology to create a barrier to entry with your products, services, service delivery, sales processes, manufacturing processes, etc.
     - Fulfillment of a strategic business niche in the industry that is difficult or impossible to replicate

The valuation process can be a stressful and confusing endeavor, and to properly value your business, make sure to have a team of experts to walk you through the process.

Learn more about getting a “Rockstar” valuation by joining Matthew Garrett at The 23rd Annual Gathering of Games, taking place September 9-11, 2015 in St. Louis, Missouri.

<http://www.openbookconference.com/>

**Other Articles You Might Like:**

- [How Great Entrepreneurs Exit Their Companies on Top](https://www.greatgame.com/blog/the-great-game-of-business/great-entrepreneurs-exit-companies-top)
- [The Arithmetic of Ownership Transition Planning](https://www.greatgame.com/blog/the-great-game-of-business/arithmetic-ownership-transition-planning)
- [Capture the Power of Your Employees Through High-Involvement Planning](https://www.greatgame.com/blog/the-great-game-of-business/capture-power-employees-high-involvement-planning)

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