You could say valuing a business is as much an art as a science. There’s no precise formula that applies to all businesses in all sectors, or even to all businesses within a sector. Instead, an accurate valuation will depend on a number of factors, including the size of the business, its profitability, growth rates and more.
Generally speaking, the safer a business is, the higher price it will fetch. For instance, investors tend to see larger businesses as less risky, even if they’re less efficient than smaller competitors. Similarly, the more certain a business’s cashflow is or the wider its operations are, the safer a bet it is for a buyer.
While you won’t want to undervalue your business for obvious reasons, you must avoid overvaluing it, too. Otherwise, you risk an inflated asking price dissuading buyers entirely, or making them think you’re not serious about selling.
Ultimately, your business’s value will be determined by the laws of supply and demand – if there are a number of buyers for your type of businesses at a time when few of your competitors are also selling, you’re more likely to get a good price.
We can help you time your business sale so you get the best price, while implementing changes that will justify you asking for a higher price.
So that’s us. What about you?
Drop us a line to discuss all things business, from your aims and ambitions to improvements you’d like to make in the short-term. We are here to help, so contact us to make a no-obligation appointment.