Business Valuation

Business Valuation

Methods of Valuing a Business
Read our guide about all the various different methods of valuation. Such as, comparison based valuations, Price earnings ratio basis of valuation, Asset based valuation and discounted cashflow.
Company Exit Multiples
Exit multiples are defined as total sale price divided by the profit. In other words how many years it would take to pay back the price out of the current level of profit. Of course when you pay high multiples for a business you are expecting the profits to rise in the future. BDO Stoy Hayward publish the Private Company Price Index or (PCPI) that gives and indication of the multiples
Internal Rate of Return
This method of valuation is more objective and involves setting the Return on Investment requirements for the buyer. This method is more favoured by Venture capitalists and can involve some complex mathematics.
Evaluating a Target Company
In order to arrive at a reliable valuation it is essential that the figures you have are a true reflection of the health and profitability of the business.
Caveat Emptor - What to look out for when buying a business
There are many purchasing pitfalls that can trap the unwary. People sell their homes for a range of obvious reasons, and they renew their cars regularly, but the promptings for selling a business are less apparent, unless there is something wrong.
Private Company Price Index ( PCPI) 4th Quarter
There are many purchasing pitfalls that can trap the unwary. People sell their homes for a range of obvious reasons, and they renew their cars regularly, but the promptings for selling a business are less apparent, unless there is something wrong.