[ VALUATION ]
How will buyers value your business?
At Allan Taylor & Co. we believe the process of selling your business starts with one question: What is your business worth? This critical piece of information becomes the foundation for any further discussions about how to sell your business, when to sell your business, and what type of buyers might be interested in acquiring your business.
Simple. Practical. Affordable.
Our approach to business valuation revolves around a straightforward question: What would a buyer pay you for your business today? While there are many ways to value a business, we focus exclusively on current Market Value. After years of experience, we’ve come to realize that market value provides the best real-world estimate of how buyers value a business for sale.
Our business valuations are not certified, and are therefore less expensive than a formal business appraisal. Turnaround time is typically three to four weeks. Business owners and their advisors use our valuation report for a variety of reasons, including:
- Selling a business
- Personal financial planning
- Exit strategy planning
- Internal decision-making
- Growth planning
- Capital structure
- Buy-Sell agreements
- Unsolicited offers
We like to start our business valuation process with a conversation about your reasons for wanting a valuation, and how you plan to use our report. In addition to asking several questions about the history of your business and current operations, we also ask for a minimum of three years’ worth of financial statements (Profit & Loss Statements and Balance Sheets), as well as corporate tax returns.
There can be many reasons for getting a business valuation, but we can’t think of one reason not to understand the value of your largest asset.
[ FAQs ]Find answers to some of the most common questions business owners ask.
[ FAQS ]
How will buyers value my business?
Buyers view your business as an investment, and are frequently weighing the pros and cons of buying your business versus another. This is important to note, as more than likely you have not been viewing your business in the same light.
A common way to get an estimate of how a real-world buyer will value your business is to use a multiple of pre-tax earnings using comparable transaction data. We call this Market Value.
The multiple is determined by several factors, including the size of your business, your industry, operational performance at your business versus averages for your industry, future growth potential, and how much risk is associated with your business.
The earnings part of the equation is usually EBITDA, EBIT or adjusted NOI (Net Operating Income). In short, it’s the pre-tax earnings from the operations of your business. We analyze your financial statements and adjust them to show the true profitability from operations in the same way that a buyer would.
While valuation math seems fairly straightforward, it is far from simple.
What makes your valuation different?
Many valuation reports give you a number, but don’t answer the following question: Would a buyer actually pay you that amount for your business? Our valuation acts as a first layer of due diligence and gets to some of the primary “sellability” issues associated with your business.
What if the value seems too low to me?
It’s not uncommon for business owners to think their business is worth more than it really is to a buyer. There are a number of reasons for this, including the belief that you should be adequately compensated for all of the blood, sweat and tears that you’ve put into your business over the years.
For better or worse, the value of your business will be judged by its financial performance and future viability without you at the helm. There are a number of ways you can bolster the value of your business. We love working with clients for two to three years prior to selling a business so that we can put some measures in place that will get you maximum value and attract strong offers from buyers.
Do I need to have a business valuation done if I'm ready to sell now?
Even if you’re ready to sell yesterday, it’s still beneficial to go through a mock due diligence exercise like our business valuation before jumping out into the marketplace. Our business valuation will help you anticipate what buyers are likely to offer you for your business in terms of a purchase price, as well as what questions they are likely to raise. The more you can prepare yourself and your business for the scrutiny of a buyer, the higher your chances of getting a successful deal closed.
Is the Allan Taylor & Co. business valuation certified?
No, our business valuations are not certified. We use a real-world buyer simulation that you can use to help you make decisions about selling your business — now or in the future — and give you some insight into what drives value in your business, and what detracts from it. Our business valuation is not meant to be used in instances that require a certified business appraisal.
What if I need a certified business valuation?
If you’ve been told that you need a certified business valuation, we would be happy to recommend a number of specialists that you can choose from. Just shoot us an Email and we’ll send you a list of capable providers.
How often should I have a business valuation done?
We recommend that all business owners get a valuation done at least every two years. Your business is your most valuable asset, and there are a whole host of reasons why you should know what it’s worth at all times.
What is the cost of your business valuation?
Our typical fee for an Opinion of Business Value & Sellability for one entity is $2,500. Turn-around time is approximately three to four weeks after we receive all of the information requested.
As a businessman who has purchased and sold numerous businesses, I can attest to the quality marketing materials that Allan Taylor produces to represent their clients in the market place. They are spot on accurate and elegantly produced. – Hank Bird, VP of Pinnacle Packaging, Inc.