FEATURED | How Much is Your Company Worth?
If you’ve wondered what the value of your business might be, here’s a guide.
A trading company or business valuation is normally based on the value of its future income.
Past earnings form the basis of how future earnings are assessed.
In my valuation reports, I review the last three years and adjust for exceptional or non-recurring items of income or expenditure.
A weighted average is applied to the adjusted results, which gives greater emphasis to the later years.
The profit multiple, or a number of times annual earnings, applied to the weighted average is normally between 3 and 7. So with weighted average profits of £250K, a company is valued between £750K and £1.75M.
I consider three important factors:
1. Markets - If there is not a sufficient market for the company’s products or services, you might as well not waste an investor’s money.
2. Management - If there is a profitable market, does the company have competent management to run the company to service that market?
3. Money - Are there sufficient cash resources to finance the company’s operations?
Item 3) always follows items 1) and 2) as money itself will not make a business.
If you would like to discuss your company valuation, please contact me:
07749 080 806
David Cane has been attending Hexagon meetings for years now.
He is a director of Sundial Tax & Finance Ltd, and a Private Company Share Valuation Specialist, helping you realise the value of your company.
The niche practise specialises in private company share valuations and exit strategies as the two are intrinsically linked, offering bespoke services.