Inventory: A Key Component to the Business Sale

Written by Ralana D. Shelley, CBI March 28, 2011 Article 5 in the "Prepare Your Business For Sale: Everyday Business Issues" series... One of the most overlooked but important issues in the health of any business is inventory. Inventory plays a pivotal role throughout its entire lifecycle, from purchase to storage to sale. It is just as important how inventory is kept and sold as who it is bought from, how much is paid for it, and how much one can charge a customer for it. Below are three key issues to consider about inventory and how it affects the health and future sale of your business. Inventory Accounting... Once a business has purchased its inventory, it becomes important how that business is going to handle it. How quickly or slowly it is turned over can have a direct impact on business value... To include in the purchase price or not to include... Most businesses offered through an intermediary will clearly state up front whether inventory is included in the purchase price, or whether it is in addition to the price... Counting Inventory at Closing... There are basically two ways to count inventory before closing... Inventory is not so simple when considering its impact on the value of a business both while running it and while trying to sell it. It is certainly somethign to handle and track carefully, and prepare it you are thinking of selling your business now or in the future. to read the full article and learn more about inventory's impact... click here.