How to value your business (for maximum sale price)
How do company valuations work? Get the maximum sale price for your business by understanding company valuation secrets & myths.
The web is full of rubbish advice on how to value your business
From useless business valuation calculators to dodgy business sale brokers; there are mountains of inaccurate theories, unhelpful advice and camouflaged adverts dressed up as free guides.
Ignore the hype. Take our FREE business saleability test now.
There is a cliché that "a business is worth the price that a buyer is prepared to pay for it and that a seller is willing to accept". That is true. But a more useful approach is to investigate that factors that motivate a buyer when it is deciding how much it is prepared to pay for a business.
How would Theo Paphitis value your business? Would his jaw drop at your inflated price-tag? Or (much worse!) would he snap up your business recognising you had under-valued it? Learn 7 factors affecting business value.
Learn how a buyer will value your business
Is it possible to understand how Theo Paphitis or Deborah Meaden calculate the value of a business Yes! It is an art rather than a science. But the Dragons know how to value a business without having to Google it. It is an uncommon skill - which is clear from some of the sky-high business values that the contestants put before them, "How do you value your business at THAT price?!"
The Dragons may appear to try and blind contestants with business value science but, in fact, they are practising the (dark) art of business value negotiation.
The buyer who is prepared to pay the maximum value for your business is less interested in your accounts information and key financial figures. What a savvy buyer wants is in the value of a business is the ability to generate future growth. More about that later.
Knowing how to value a business is an art not a science. The Dragons are experts in how to value a
business. They do it about five times per show.
How to value a business differently?
The accounts of a company tell the story of where the company has been, not where it is going. Achieving maximum sale value for your business relies on showing where your business is going. A buyer will understand that "The past is yours, but the future's mine". The theory is simple! Great buyers know this. It is sometimes a hunch. A bit like buying a dress that is not your usual colour or style, because you 'feel good about it'. This website will show you how to master the art of valuing a business for sale.
When the value of your business is the value of your pension?
Is the quality of your retirement lifestyle tied up in the value of your business? For most business owners it is. Are you keen to unlock the value of a business? How do you know when the value of your business is enough of a nest egg for you to put it up for sale and retire?
The mistake most business owners make is to value a business at a price below its maximum value. Even worse - they will often fail to sell their business at all. Why? Because most do not know where the value in a business lies.
It is perfectly possible for smart business owners to manipulate and enhancing the key factors that a buyer will value.
The real value of your business lies in the future. Buyers who pay the maximum value of your business understand where your business is going, not where it has been.
Small businesses that sell for BIG bucks
The secrets of how to value a business are not too complicated for you to use in your own business. They cannot be summed up in a single paragraph, but it is within your grasp to sell your business for maximum value.
If you need inspiration look at how the owners of Instagram secured a valuation of $1billion by following these simple business valuation rules.
Category: Personal Finance