The process to determine business value is both an art and a science. Ultimately, the most accurate value is the amount a buyer is willing to pay for the company and the Business Owner is willing to accept, when neither party is under duress.
How Do I Determine the Value of My Business?
The first question to ask is, “What will you, the Business Owner, do with the information?”
- Are you wanting a benchmark to measure future growth and improvement (in other words, a valuation benchmark)?
- Do you have an “exit number” and want to know if you have reached your goal selling price?
- Are you simply curious with no immediate desire or intent to sell your business?
- Are you ready to sell and want to negotiate from a position of knowledge?
If you are building your business for a future sale, or simply curious, a broker opinion of value will give you the information you need to plan for a future exit by utilizing multiples and comparables.
The multiples and comparables are weighted to determine a potential asking price. Then, this figure is put through a lender’s assessment and a buyer’s test to verify that the asking price is attainable in today’s market. Finally, a Gateway broker can provide you with a broker opinion of value at no cost and with no obligation to list your business for sale.
Furthermore, if you are ready to sell your business now, consider the 3 options below:
- Rely on a broker opinion of value
- Leverage Gateway to provide a more in depth study:
- After utilizing proprietary software, weighting asset based, market based, and income based approaches, to determine selling price ranges.
- Secure an independent 3rd party valuation:
- If your Seller Discretionary Earnings are near $1 Million annually, the independent third party valuation allows you to negotiate from a position of knowledge. Your Gateway Business Broker can facilitate a 3rd party valuation at a significant cost savings to you.
Tags: Determining Value, FAQs, Seller, Value