There is no single way to value a business. However, if you are considering the sale of your company, it is likely that you will want to know how much you can expect to achieve from the sale – both for planning and marketing purposes.
Thankfully, most sellers tend to use one of four main methods as the best way of valuing their company, through assessing: price-to-earnings ratio, asset valuations, entry cost, and discounted cash flow. Below, we’ve explored each of these methods, in turn, providing an insight into the businesses that may suit each option, as well as an example of calculations for each.
Business Valuation FactorsNo matter what valuation method you choose, you will have to consider one or more of your business’ assets and factors.
Price-to-earnings ratioThe method of valuing a business by price-to-earnings (P/E ratio) is arguably the most common. It is considered the best choice for a business demonstrating strong profits as it can indicate both high forecasted growth and a track record of repeat business.
Asset valuationAsset valuation is often the method of choice for strong and stable businesses brimming with tangible assets, such as property and machinery.
Entry costThe concept of entry cost is just as it appears – the cost of creating your business from scratch should you start again.
Discounted cash flowDiscounted cash flow is a complicated valuation method that is almost exclusively used by large, established businesses such as energy companies that are likely to be able to predict cash flow.
This is a fantastic opportunity to acquire a South East England based lithob& digital print business with excellent transport links/access to London and the M4 corridor.
The business commenced activity in 2012 and provides high quality care to its service users, enabling them to maintain as high a level of independence as possible. The owners are very experienced in health and social care and have built a business wi...
Established in 2013 this care provider has become very well known in the local area for the high quality, tailored care and companionship they provide. The agency strives to deliver the very best home care services in the area and prides itself in de...
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