There are times when a business owner decides that it is time to sell their business or an investor come to you with an offer to acquire the company. This is when it is essential to estimate the value of your business so that you will have a clear understanding of how much is your business worth.
There are many factors that can influence the value of a business. Some of the more important ones are as follows:
- Past and future profits and cash flows
- Current and future prospects of the industry
- Barriers to entry and state of competition in the industry
- Ownership of trademarks, patents, fixed assets, stocks
- Number of customers/ clients and the no of turnover days of accounts receivables
- Outstanding loans to banks and suppliers
- Income tax and another corporate compliance record
However, how much value you can derive from your business will ultimately be dependent on how much the buyer or investor is prepared to pay. They will of course also use the above factors to arrive at their offer price.
Therefore, the value of a business must be justified based on hard and supported facts so an agreement can be reached by both parties to enter into a deal.
If you need help to value your company, please contact us and we will be able to advise you on the best way forward.
For better understanding, consult a business consultant.
