Wednesday, 15 Jul 2015

Successfully selling your business

Successfully selling your business

Achieving the best price

A business is worth precisely what someone is willing and able to pay for it.  There are formulas and calculations that can be used to arrive at the initial proposed valuation but the only way to assess the true value of your business is to put it on the open market and see what offers come in.  Even though at the outset there will be uncertainty as to the true value of the business, there needs to be a starting point, and accountants and business agents have for some years used a number of different methods to achieve the initial ball park figure.  This usually takes the form of looking at the net profits of the business and adjusting them to remove any unusual or one off items and adding back any costs or expenses that should be included. Once this is done an appropriate multiplier dependent on the type of business and market conditions is applied to the adjusted profits.

Many advisers do still claim that valuing a business is an art as opposed to a science and two independent valuers could quite easily arrive at different valuations. Experience does play a major part in valuation as professional advisers may be able to draw upon similar situations that they have been involved with to ensure that a third party purchaser is shown a clear picture of any particular business that is being sold. The actual multiplier to apply will depend on the business itself, the business sector and the economic climate.  Again, experienced advisers may be able to draw upon their knowledge to arrive at the correct multiplier


If you require help in selling your business or need advising in any other areas, then please contact our company & commercial lawyer Umberto Vietri on 01535 613 674 or email umberto.vietri@awbclaw.co.uk

Umberto Vietri
Partner
Employment, Company & Commerial
Tel: 01535 613 674

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