It’s the million pound (or more) business valuation question that everyone seems to want to answer, yet few will guarantee.
There’s a good reason for that: a verbal valuation is easy, but achieving it is much harder. So let’s look at some observations which can be supported when considering valuation:
1. Businesses are mainly valued at profit.
2. Valuation on turnover is only used where there is substantial secured repeated income
3. The larger the profit, the higher the multiple
4. Multiples vary by sector, but only by one or two factors
5. Deal values are not significantly impacted based on the choice of sales advisory firm
so, given the above, we have also number-crunched over 60,000 deals to come up with the best ‘top line’ valuation calculator to give an indicative offer.
Please fill out this form to receive our business valuation calculation for your company on a ‘cash free, debt free’ basis. Should you contact us, we can also offer you further support to calculate any adjustments to your EBITDA, as well as other considerations based on your performance and profitability.
Our business valuation calculator will offer a reasonable guide to the value of your business, but for you, that should just be the starting point. Every situation is different and there are many ways in which we can add value to the process and increase the offers for your company.
Ultimately, however, business valuation is just a number. What a credible buyer is willing to put on the table for you is what matters. With our extensive business buyer reach capabilities and data, as well as our ability to emphasise fit, we see it as merely the starting point for more.
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We don't want owners just to rely on what one company tells them. We therefore have three additional sources of business data which are reference points for the calcualations, so you can have real confidence in what is being reported.
We make it clear that all using the calculator that this is only based on standard sector multiples and therefore gives a range within which it is very likely a business will be sold. This does not take into account growth rates, patents, contracts and other factors which may affect the valuation. If there are extraneous issues, it would be best to contact us and we can explore this with you.
Yes, they do, mainly because a company making more profit is almost certainly more stable, has a stronger management team and will be less disrupted by a change of ownership.
If you have been quoted a high value for your business, you need to first question the motivations of the source of the quote. Overvaluation is commonplace, and often used to secure signatures and commitments. We'd recommend you ask whoever gives you a valuation how they came to that value and how they can evidence the multiples used. In most cases, they can't - it's just a number they thought would give them the best chance of securing your signature.
Most valuations are based on not more than one year, and often are calculated on an average of 3 years. So if there was a bad year, then it can be taken into account. Particularly with Covid disruption and other economic factors, buyers are willing to listen to reason. The last completed year, and your current performance are the most important factors.
The above data gives you a reasonable guide as to the value of your business, but for us that's just the starting point. Every situation is different and there are many ways in which we can add value to the process and increase the offers for your company.
Ultimately, however, a valuation is just a number. what a credible buyer is willing to put on the table for you is what matters. With our extensive business buyer reach capabilities and data, as well as our ability to emphasise fit, we see it as merely the starting for more.
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Our methods are successful whether helping a company sell within a small region, cross-border, or even cross-continent.
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