How We Value Your Business

We use all of our knowledge and experience to make sure that your business transition goes smoothly.

How We Value Your Business

Our team will ensure that you receive the best business valuation, and guide you through the process. However, it is important to maintain realistic expectations about how much your business is really worth.

Valuing Your Business

We have gathered some useful advice from business owners who have sold their businesses with us in the past.

You may find them helpful as you prepare for your valuation.

There is often little magic in a magic figure

The reality of how much you are really able to sell your business for may be very different to the ideal ‘magic figure’ that you have in mind. So be prepared to enter the valuation process with an open mind.

Remove the rose-tinted spectacles

It is difficult, but you have to be honest and take an objective look at your business, without letting your emotions cloud your judgement. Shareholders, who are often too close to the business to be objective, frequently find this difficult. Our supportive team will help you to think objectively about your business and make a realistic assessment.

Play to your strengths

Don’t forget about smaller things that will add value such as: a loyal customer base, patent protected products or particular sales opportunities.

Focus on the realistic value rather than what you need

Don’t count on the sale of your business matching the target figure that you have for the next stage in your journey, such as retirement or an investment – it probably won’t!

Focus on the realistic value rather than what you need

Don’t count on the sale of your business matching the target figure that you have for the next stage in your journey, such as retirement or an investment – it probably won’t!

Calculations

Price Earnings Ratio

This traditional method involves calculating the historic profit performance of your business.

Most of the assets on your balance sheet are accumulated as the result of the profitability of the
business, and included in the valuation.

Most cases start with a multiple of 5.

Earnings Before Interest and Tax (EBIT or EBITDA)

This method takes into account any “spare” cash in the business. The multiple will generally be between 2-3 times.