How much is your business worth?
Probably less than you think.
There are no shortage of valuation methods at your fingertips, but the short answer is: your business is worth what a buyer or investor is willing to pay – and not a single penny more.
I often meet owners who have calculated a particular valuation of their business, which may or may not be realistic.
They assume that by simply coming up with a number, based on a given formula (let’s say EBITDA multiples), means there are willing buyers ready to take the other side of that transaction.
But selling a business isn’t like selling a house. You can’t just put a For Sale sign up and expect serious buyers to be waiting on the sidelines, ready to acquire.
The other thing I see a lot, are false comparisons with other businesses which previously sold for ‘astronomical’ multiples. But when you dig a little deeper, the circumstances can sometimes be very different – and ultimately, any comparison is highly nuanced.
Too much dependence on generic valuation methods is naive. You have to be strategic way before your exit date. So, concentrate on WHAT REALLY MOVES THE DIAL, in terms of valuation and also what will drastically improve the number and quality of buyers interested in your business.
Working with strategic partners can help you find the right path, increase the value in your business and accelerate your journey towards a successful exit – and one with the highest possible valuation.
Don’t leave it to chance.
#SME #UKBusiness #M&A #ExitStrategy