Why doing your research is crucial when it comes to business valuations
You would never put your house on the market without knowing how much it was worth, and you would never buy a car without knowing its true value. When it comes to valuing your own business - or a business you want to buy - doing your research is essential. Our knowledgeable and experienced accountants can handle business valuations on your behalf.
We are experts in producing business valuations of:
- sole trader and partnership businesses
- limited companies
- shareholdings and partnership shares.
When might I need a valuation for my business?
Business valuations are most often needed for:
- price negotiations for a merger, acquisition or sale of a business or its goodwill
- retirement from a business
- employee share schemes, such as EMI
- agreeing the tax treatment of these transactions and events.
What business valuations methods do you use?
- Future maintainable earnings method. This method seeks to establish the amount of earnings, in the form of profits, which the company can sustain for the foreseeable future. The weighted average of previous years’ profits are multiplied by a factor representing the number of future years’ earnings – the P/E (Price/Earnings) ratio.
- Net assets method. This method ignores future cash flows which the business may generate and instead values the assets less the liabilities of the business at a given date on either a going concern basis or on a break-up/forced sale basis.
- Industry-specific methods such as multiples of gross recurring turnover, more commonly seen with professional service-based firms.
- EBITDA – Earnings before interest, tax, depreciation and amortisation. This method is used to approximate the cash flows generated by a business which is then multiplied by a representative industry factor to give a valuation for the business.
How else can we help?
BSR Bespoke accountants in Tunbridge Wells are skilled at negotiating with other parties with you, from HMRC to prospective buyers or sellers.