Valuing your business for sale

There are two certainties when valuing businesses

1. is the sellers valuation and that of potential buyers are unlikely to tally, and

2. predicting the amount of cash the company will make in the next few years is critical

The starting point - you need to be clear about the amount you need to realise - but your business is only worth the sum a buyer is prepared to pay. Another consideration is whether you and other key staff will be staying on as part of the sale or if you wish to exit the business entirely. This can be a major factor determining value.

Debt depresses value - your record of controlling costs and also the debt levels within the business. If the company owes a lot of money, this will often have to be subtracted from the amount that you finally receive from a trade buyer.

Timing - The value you achieve depends on selling at the right time. Macro factors, such as the state of the economy and conditions in your sector at the point of sale, will come into play, not to mention the question of supply and demand. How many potential buyers and offers are on the table? If there are a few, you might be able to play them against each other and raise the price,

Planning - The whole pricing process should be conducted early, trade buyers prefer a handover period rather than buying an owner-manager out in one fell swoop. Factor in a handover period of at least six months, maybe even longer.

Don’t under-sell intangibles - Intangible assets such as people, brands, patents, copyrights and licences are important. You must quantify these because they can radically alter the pricing of your enterprise.

Your brand has value - Brand value is often a company’s most valuable asset and a thorough brand valuation will help negotiate a better sale price.

If you are thinking of selling your business or want to discuss the opportunities that are available to you then please contact Richard Dare on 0845 2576835