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a little help needed please

  • Thread starter Thread starter Boris
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Boris

The company i run is doing quite well and we have been asked if we need a cash injection to take us to the next level by a few ppl, last week we were approached by someone that we already deal with asking the same. We have upto now stood firm and said no but this latest offer is almost too good to turn down, not money wise but with this person on brd we feel that he could take us to where we would love to be much much sooner than we had hoped seeing as he has a huge amount of knowledge of the industry and many many contacts.

my dilema is what do we offer him and how do we work out what we are worth.


thanks
 
You should speak to your accountant, but a company is worth what someone is willing to pay for it.
I guess you could base it on your profit and depending on the amount they are willing to inject, offer a percentage accordingly.
 
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Normal valuations are 3 - 10 sales or 6 - 20 earnings. The lower of the ranges if slow growing business, higher level if a very high growth business / high profit / lots of untapped expansion, and a high moat (hard to emulate due to brand or cost of entry)

These levels are lower in the current climate. Most investors are looking for a 10x return within 3-5 years.

Try and find a similar company that is listed on AIM / FSTE / US stock markets and look at their margins / PE etc.

Work the offer - counter offer.
 
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