Valuing a Business

There is no exact science to this and ultimately the value of a business is determined by what price a willing buyer will pay for it. Advice must be sought by an accountant and/ or business valuation specialist. Both of whom can use industry standard techniques to provide guidance and ball park figures to work from.

What matters are taken in to consideration when valuing a business (this list is by no means exhaustive)?

  • Name, branding, trade names, trade marks, domain names, goodwill.
  • Other intellectual property rights owned and enjoyed by the business.
  • Business history, historic performance, present performance and future projections.
  • Client base and value of contracts or orders.
  • Location, premises/ property.
  • Employees and skill sets.
  • Financial aspects, gearing, loans, creditors, debtors, stock, raw material, bank account balance, cash flow, credit accounts, gross profit, net profit.
  • Supplier and distributor chains and availability of resources.
  • Strengths, weaknesses, opportunities and threats of the business.
  • Regulatory control.

Some of the items mentioned will be difficult to quantify due to the fact that they are intangible. intellectual property rights, goodwill etc being key examples.

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