If you want to do a Business Valuation you might, or rather you should be asking yourself. What is the real value of my business? or What is the real value of the business I want like to acquire? A detailed valuation of your company or the company you might be interested in acquiring can definitely get you the answers you are looking for. Contact us for a professional business valuation.
Increasing the value of your company
When you have made the decision to sell your company your aim is without a doubt to get the highest possible price. There are several ways in which you can increase the value of your company. To find out how read How to increase the value of your company.
About Business Valuations
There are a number of different aspects involved with the valuation of a company. Such as the industry the company is in. Some buyers pay higher multiples for some industries and lower multiples for others. Buyers often pay more when more opportunities for synergies exist. Or when the opportunity for growth is higher.
The state of the economy is also an important factor. We all know that during a recession the valuation of a business is lower than when compared to when the economy is booming. The structure and key drivers of the company also have a significant effect on the valuation. Such as the management structure. Or whether the company has existing contracts with clients. Or if those clients are or are not locked into those contracts ?
The valuation of a company is an art form as much as it is a science. In the end what really matters is what a prospective buyer is willing to pay for your company or what you are willing to pay for a potential business. Or for what value you are willing to sell your business for.
Methods of Valuation
There are many methods used to valuate a business. Using multiple methods for a business valuation are recommended for an accurate determination. One method to valuate a company is to use the Cost Based Method also called the Asset-Based Approach. These methods of valuation are the estimated value of the sum total of the required costs to create a business of equal value.
The Discount Flow Method (DCF) is also used often. A few variations of this method exists. Although the calculation of this can be complex the end result will tell you what you will receive from your investment, adjusted for the time value of money.
Another way we valuate a company is taking the multiples of the industry that the company is in, often the EBITDA. Then use this on the on the company’s financials to arrive at an estimate.
Visit Methods of Business Valuation for further details
Also see Seller’s Side of Mergers and Acquisitions and Buy Side Mergers and Acquisitions for more details on these subjects.