When it comes to selling a business, possibly the most important question you need to ask is – how much is it worth?
Unsurprisingly, there’s not just one way to value a private business. It’s worth more to one person than another, and at different times in the economic cycle. While you as seller will want to drive the price up, potential buyers will want the opposite.
Although there are relatively easy ways to value certain parts of the business – such as stock, land, machinery, increasingly there could be a sizeable ‘intangible’ element to the value of a business.
Intangibles include “Goodwill” – this could include intellectual property rights, trademarks, and the reputation of the business. Intangibles are notoriously difficult to value, and in many cases will come down to how keen a potential buyer is to acquire the business – everyone will have a different view.
When looking at the overall value of a business, there are a number of different valuation methods which are commonly used – from using earnings multiples, to calculating how much it would cost to create a similar business.
Valuations can also be required for…
- Negotiating with the tax authorities;
- Business sales and purchases;
- Business mergers;
- Divorce proceedings and matrimonial disputes;
- Raising finance;
- Company buy back of shares;
- Tax planning;
- Financial reporting requirements;
- Shareholder/partner disputes;
- Pension and exit planning.
Whatever your reason for wanting a valuation, it’s key that you instruct someone in whom you have confidence. Deciding who to instruct is a decision in itself – we won’t let you down.