Exiting your business: The value of your business
Whilst you will have some idea of the value of your business, you may have a more optimistic view than that supported by the market. On the other hand, you may be surprised at how much someone values your business, perhaps as a strategic ‘bolt on’ to their own business. The value of your business will be affected by various factors, including:
- your profitability, and in particular your 'maintainable future earnings'
- intangible assets such as goodwill
- your other assets and liabilities, such as your property
- external factors such as the state of the economy in general or your market in particular
- the quality of the management team and employees
Businesses are sold for many reasons, such as the principal shareholder and director wanting to retire, or the shareholders wanting to realise their investment at a time when the market is good. The reasoning behind your sale is likely to impact on your choice of preferred bidder, your negotiating strategy and the ultimate price achieved. You might choose not to sell to the highest bidder if, for example, you are concerned about selling to a competitor or want to ensure continuity of employment for your staff. It is not only the owners who are affected by the sale of a business; the management and employees of the business will be affected too. Even if their jobs are secure, they are likely to worry about their future prospects. Similarly, the customers and suppliers of the business may be concerned about the future of their trading relationships. You need to ensure that you manage these relationships and maintain the value of your business during the sale process. Not only can we can help you to value your business, we can also suggest ways to increase that value.
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Within Selling your business... Within Exiting your business… General...
