Chartered Accountants
Have You Considered What Your Business Is Worth?
There is an old adage stating, “A business is only worth what someone is prepared to pay” and this will always remain true. Nevertheless, the seller will have a target price in mind, as will the purchaser, but it’s vital for both parties to be realistic. In certain sectors, such as Healthcare, valuation methodologies based on EBITDA (Earnings Before Interest, Taxation, Depreciation and Amortisation) or turnover multiples have become the norm.
But for many businesses it’s just not that clear, so what do you do? Here are a few thoughts:-
- Speak to others in your sector to build your anecdotal knowledge
- Pay for a professional valuation – will the cost be worth it?
- Set your own price which might be the price below which you cannot afford to sell
- Do your research and ask your professional advisors
- Don’t set a price, simply put your business on the market and invite offers
- Use previous evidence of value e.g. a prior sale
Whichever route you choose, you must accept at the outset that valuations are not an exact science so you may not like, or believe, the answer – this will only ever be a guide.
What is our role?
Together with our Corporate Finance team, we will support you through the valuation process at all stages and work tirelessly for a great outcome for you. By advising on the tax implications of a sale we can help ensure your after-tax proceeds meet your expectations.
If you are thinking of selling your business and would like to discuss your circumstances with sector leading experts, then please contact our Transaction Tax team today.
You can read our advice on ‘What are you selling: shares or assets’ here.
