How much is your business worth?
When it becomes time for company owners to consider selling their business, some will have formed a view as how much it might be worth. Sometimes this value is driven by gut feel or what the owners might want/need financially for the next chapter of their lives.
The reality is the ultimate value is a balance of what it is worth to you and what a third party is willing to pay you for it. Having realistic price expectations is much more likely to result in a successful transaction.
Valuing your business
It is true to say that valuation is not a science, but there are a number of data points that can be used to generate realistic perspectives, including understanding future maintainable earnings, market multipliers of profits and/or revenues etc., which can be triangulated to give a range of values.
On top of this, we need to include value adding (or sometimes detracting) perspectives for non-tangible factors such as, the quality of the management team, market position and USPs and possibly most importantly how attractive the business is to multiple potential buyers.
Having a number of interested parties in your business drives competitive tension. Being able to successfully articulate the strategic value you may bring to their business will be key to this, even if it is difficult to quantify numerically.
In our view, the businesses that have commanded the best value (or have been in the smoothest process) are those that have thoroughly prepared themselves for the sale and taken advice early to maximise both the value and the chance of success.
We are experts in selling businesses and have a wide experience of how trade, PE buyers and MBI teams will review businesses and define its value. So if you are thinking of selling business we can help you with:
- a realistic appraisal of where the business is today and how that is likely to evolve overtime;
- keep you appraised on market conditions in your sector to optimise sale timing;
- identify the enhancers and detractors in your business, along with sound commercial steps to augment or address these as the case may be;
- set realistic milestones to address any the concerns and build value;
- getting you to the right buyers with a well prepared story that articulates the key selling points that should appeal to potential purchasers; and
- beginning the market research early to identify potential purchasers and what they are going to be looking for. In addition, we can often warm up the market on a ‘no names’ basis to build interest ahead of the formal sales process.
If you are thinking of selling your business now or in the future, please do come and speak with us.