A question that many different business owners ask themselves when they think it’s time to move onto a new venture or better still when it’s time to retire. So how do you value a business?
There are several different factors to consider which could positively affect your business value, which a number crunching calculator does not tell you.
So where do we begin?
A couple of pointers to give you guidance on your business worth.
The strength of a company’s brand can affect the value (this is varied from industry to industry)
What does a potential buyer look for when looking to invest into a business?
A top management team is the making of a strong a business. This will not go unnoticed to someone who is looking to get involved. All of the above would be attractive to a potential buyer, it shows steadiness, growth and a long-term benefit in acquiring this business.
Several factors come into play when a buyer looks at making an offer such as:
A 3x multiple of EBITDA is a very standard and common multiple paid for businesses with a turnover above £500k with an EBITDA also of £100k+.
Below £500k revenue you would be looking around 2x EBITDA as a rough guide and multi-million-pound revenues with EBITDA of close to £1 Million, a buyer would pay 4x EBITDA in general and to achieve even stronger multiples than this such as 5-7x, those businesses will be achieving an EBITDA of circa £2 Million+.
In conclusion when deciding to sell your business talk to the experts and get a professional guidance on value before rushing into a transaction.