How do I value my business for sale

[randa bott]

Hello everyone,I have sadily decided to sell my much loved retail business.Does anyone have a formula of how to calculate the value and help me get an average 'sale' price.Any advice would be greatly appreciated.Thank you

 

[Set up a Company]

The first thing to remember is that a business is worth what somebody is willing to pay for it. However there are a number of ways in which you get a rough starting point for a valuation based on the recent accounts.

Sustainable profit is the main thing you need to calculate (normally based on the last three years trading, weighted towards the most recent year). Many people will then value the business at 3 times this figure.

However more detailed facts and circumstances need to be taken into consideration. For example, what % of customers are recurring? What % of sales does the largest customer account for? What is the quality of machinery and equipment at present? What are the staff turnover rates like?

A business is worth what somebody is willing to pay for it, but it is important to be able to justify these propositions with facts and figures!

Try The Business Valuer (valuation software) if you are not confident at the number crunching.

Good luck!

John

 

[Rhodes100]

I would suggest that you contact a few business transfer agents just like you would contact an estate agent if you were selling your house.

You then ignore unrealistic valuations and instruct the agent you feel most comfortable with, after searching on the internet for other peoples opinions of them.

Selling a business involves much more than you think if you think you can diy.

ps business valuation software is a waste of time.

 

[Set up a Company]

ps business valuation software is a waste of time.

Why do you say that? We have used it successfully for numerous valuations. And you would be surprised at the number of brokers and accountants who use it to kick start their valuations.

Don't see it as a way of getting a hard and fast value, but instead a good way of making sure your figures are accurate to start with.

 

[robindunne]

We offer a business valuation services at £149+vat if you're interested.

 

[DeanCo]

[FONT=Arial, Helvetica, sans-serif]Valuing your business in today's market is highly complex. There are many factors to take into account, which can affect your business market value, such as profit, turnover, cash flow, market value of assets, your industry sector, competition in your local area and regional business health can all affect the market price. [/FONT]

 

[Rhodes100]

This software is a waste of time as it will ignore "soft" aspects. A valuation or a market appraisal is not a financial calculation or anything to do with number crunching.

For example how many other similar businesses are currently on the market in that area, what does the retail business look like, most of the criteria that a buyer would use in assess its value to them.

In my opinion any agent (broker) or accountant that needs software doesnt know what they are doing.

If the guy wants a hard and fast value I could give him one in a couple of minutes without any software, it not a complicated calculation but it wont be accurate.

 

[randa bott]

Thank you all for taking the time to give your advice.It has been of great help.

 

[tory15018]

It is very difficult to value a business by yourself as it requires a lot of expertise and knowledge about the market. Also you need to consider the economic situation of the country, the reputation of your business, the location of the business etc. So one can take the help of brokers or chartered accounts who have good knowledge about this field and would provide an accurate estimate of your business for sale.

 

[Digital Investments]

Keith Green from Anderson Moore is a business agent we have worked with in the past and who we would recommend. Very approachable and consultative.

http://andersonmoore.co.uk/default.aspx

Good luck!