Help how to you value a business

[Darryl Wright]

Can anybody please help, a larger competitor wants to buy my business and set me on as a director in their business.
How do I vaule my business? does it go on turn over? does it go on prifit?

 

[Bob]

Do you have an accountant as they should be able to help you?
How much money are they talking about as that may influence how much you want/need to spend on professional advice?

 

[stevebrownlie]

There isn't a set formula - businesses in different sectors will be valued differently. A lot will depend on the value of the brand, repeat business, contracts with clients, sources of new clients, rate of growth. Plus the old 'it's only worth what someone will pay' rule.

 

[anhhaoueb]

Basically, you can try 2 methods:
Measuring your business assets: It should be done by the accountant, he/she will add up all the assets, subtract depreciation and then the result will be the business value.
Another way is income approach: In this way, your business value is measured by calculating how much money it can generate in the future. In other words, you will use net present value method, discount all future cash flow to present then come up with a number, that is your business value.
Hope this help.
Best,
Anh Hao.

 

[MOIC]

Speak to your accountant as there are MANY factors to consider.

 

[Philip Hoyle]

Different industries have different valuations models. Some are based on turnover, some on profits, some on assets. Some are based on future income, some on past income. Usually, several different bases are used, which are then averaged. Certainly not an exact science!

 

[RBS]

I`ve heard something like value of your business = 5x yearly profit.

 

[Bob]

I`ve heard something like value of your business = 5x yearly profit.

Not being rude, but did you hear it down the pub?
As Philip has said, different industries have different valuation models

Different industries have different valuations models. Some are based on turnover, some on profits, some on assets. Some are based on future income, some on past income. Usually, several different bases are used, which are then averaged. Certainly not an exact science!

 

[Darryl Wright]

Thanks for all the posts I guess the accountant will be getting a call