How to value a company – an expert guide
Company Valuation Methods
Each company brings with it a unique set of circumstances that influence its value. What is a strength for one business could be a weakness for another. That’s not to say that it can’t be done though – there are a core set of criteria that all business professionals look at when assessing the value of a company.
Current and future financial performance
It might sound counter-intuitive, but a business doesn’t necessarily have to be profitable for it to be worth something. Of course a business that has consistent incomings will be worth more than one with weaker profit and loss sheets, but buyers look for potential. This can, and will, affect the valuation of the company.
If the business has a good name within the industry it operates in, this can benefit its value. Being able to show a strong customer base and a trusted brand will grab the attention of a potential buyer, and will significantly increase the value of the business.
Strong management team
Most business owners want to work on the business rather than in it, and this is achieved through having a strong management team. Showing potential buyers that the existing team will allow them to take over the business without much disruption will enable a quicker sale.
Internal and external processes
A business that already has strong supply chain, dispatch and internal processes will be far easier to run than one which requires extensive work to make efficient.
Finalising the sale
Selling a company, like selling a house, can be a complicated business with many potential pitfalls and hassles for those who haven’t consulted a professional. To ensure you maximise the value of your business and get the most from your sale, we have a company valuation calculator and our team of professionals can be reached 0800 612 5929