Want to know what your Business is Worth?
August 2019 - We have seen hundreds of business owners over the years allude to the fact that they know exactly how to value their business and what it would sell for in the current market.
We feel that these business owners have been misled, based on an assumption that this can be easily calculated for their industry to arrive at the figure a buyer will pay.
We wish it was that simple!
You could have 2 identical businesses operating in the same city with similar product lines, the same profitability, clientele and stock holding yet, one may achieve double the price of the other.
One of the most common myths seems to be that a business is worth its annual turnover, or a sum of three to four times it's net profit. Even though there are some specific industries that work to formulas (like Management Rights complexes and Childcare Centres) most businesses need to be valued on their own merit.
We assess a multiple of variables that may affect the value when appraising a business for sale. Factors such as cash flow requirements, supply agreements, owners input, amount of clientele, key staff members, ability to finance, equipment included, lease terms, rent payable and of course current market conditions are just some of the things that are taken into consideration and examined.
Whilst at times sellers can feel disappointed to learn they may not achieve the price they had in mind, often we exceed business owner’s expectations.
This is particularly a common occurence for medium to large sales, where well established businesses with solid management structures and strong profit are offered. Cashed up and motivated buyers have a healthy appetite for these and they are well aware that they will have to pay a premium to obtain them.
We are finding that there is an abundant amount of buyer activity at the moment.
We are continuing to record our strongest results in over 20 years.
If you are interested to know what your business is worth, now is the best time to find out!