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.
However, before you get started, it is important to consider the assets and other factors that could influence your calculations, some of which could heavily affect the value of your business.
Valuation FactorsNo matter what valuation method you choose, you will have to consider one or more of your business’ assets and factors.
Established commercial management run laundry business. Established in its present location for over 20 years, this outstanding business returns first-rate profits from its 5-day working week. Targeting the pharmaceutical, electronics and food sector...
An established and successful business which sources and supplies promotional products and corporate gifts. A key part of the business is creating bespoke products in response to client’s briefs.
Established business which sells a wide range of high-end bicycles, and associated triathlon accessories (clothes, running shoes etc).
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