What is my business worth?

Valuing a business is not an exact science.

As a business owner you may have an idea of the figure you want to achieve in a sale. However, any business is worth only what a buyer is prepared to pay. Therefore, thought must be given to how you can optimise value and achieve your goal.

Buyers will want answers to questions such as the following:

How much of the profit is dependent on the owner’s connections?

When the current owner exits, how will this affect revenue?

Where can I, as a new owner, create value?

Will I be able to cut costs?

Will I realise asset value?

If I combine this new business with my existing business, will its sum be greater than the individual parts?

Will market demand increase or decline for the goods/services?

What effect might new technology have on the business?

If your business is not performing at optimum levels, then the price will be discounted. However, you may be close to reaching the end of your own personal road with the business, so knowing the best time to exit and ensure you will still get a sale receipt is important.

Different types of sale will result in different values being placed on a business. Most sales will have some kind of earn-out where the seller will not get the full sale proceeds immediately, with part of the price being dependent on future sales / profits.