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How to Value a Business – Company Valuation Methods

If you want to know how to value a business, get in touch with the CVS team. Utilising our robust company valuation methods, we can provide a figure that is in line with today’s market.

 

There are, however, a number of key considerations that can positively influence your company’s value that the calculator cannot take into consideration. This is just the first stage of our journey, and once you’ve got an idea of the kind of figures involved, you should work with our team of experts to go through the following:

 

Future Financial Performance

Many businesses that can demonstrate consistent performance levels are naturally going to be an attractive proposition to potential buyers. It is simply a ‘safer bet’. Because of this, higher values are generally paid by acquirers who can see long-term growth and prosperity.

 

Strength of Brand

Depending on the industry, the strength of a company’s brand can influence its value. If the brand is perceived positively, this will drive the valuation higher. Additionally, having significant IPR or patents means that an acquirer is investing in a product or service that will benefit them in the long-run. Ultimately, being associated with a strong brand name will help the acquirer break into new markets.

 

Customer Base

When buyers see a brand with a strong and trusting customer base, they are immediately drawn to the business. This is particularly relevant to trade buyers that might be able to sell cross-existing products or services straight into the target company’s client base. This approach offers companies access to potential customers they might not be able to target without the acquisition.

 

Experience and skills of management team

A business is held together by its management team. The strength of a company’s management team will not go unnoticed by potential buyers (particularly investment buyers who are looking to get involved). The main point is that investment buyers won’t be necessarily involved in day-to-day operations, so they need a trustworthy and reliable management team to oversee the business.

 

Supply chain strengths

A business with a strong supply chain provides significant benefits, from manufacturing quality to competitive prices. This may mean that the acquirer can increase margins on their existing products by making use of the target’s supply chain.

 

Synergies with the buyer

Occasionally, a buyer can economise by making an acquisition. This might include reducing staff overheads, machinery, premises capacity and so on. An acquirer can make significant savings by utilising both operations, increasing profit margins as a result.

 

Achieving a successful company sale

Owners who are considering the sale of their company must consult a professional business adviser before jumping into a transaction. This is the owner’s prerogative if they are to retain the maximum value from their business. The value of a company can be greatly influenced by developing a persuasive argument for the buyer to pursue an acquisition.

 

For those considering the sale of a company, our valuation calculator provides a good guide and can also indicate how much money your company could fetch on the open market.

 

For more information, or for a more detailed review of your company’s worth, please contact us on 0203 441 2003 or email enquiries@company-valuation-services.co.uk