How to value your business?

How to value your business?

Selling a business can be a very daunting and stressful process, but as long as you ensure that you have the correct sale structure, and value your business in the correct way, your sale will very likely be a success.

How to sell a business?
To begin, there are various ways to sell a business, it is key that you understand each method and choose the method that will work best for you. These methods include trade/share sale, management buy in/out and employee ownership.

Firstly, trade/share sale means the disposal of a companies shares, assets or even liabilities in one part. Secondly, management buy out/in results in the company's existing management team acquiring a substantial part or possibly even all of the company. Thirdly, employee ownership is an indirect form of employee ownership. Therefore, a trust holds a controlling stake on behalf of all employees within the company.

When selling a business, you should understand that selling a business includes heavy planning and marketing as proper planning helps attract buyers therefore it is important not to rush when deciding on whether you should sell your business or not.

Notably, if you decide that you are going to go ahead with selling your business, you must bring your accounts up to date as well as settle any disputes you may have with employees, clients, or customers to increase the chance of your sale being as smooth sailing as possible. Importantly, it may be helpful if you put more profit into the business as well as asking yourself the question, do any contracts and leases need to be resolved? Additionally, ensure that your paperwork and records are in order.

Why do you want to sell your business?

There are many reasons people decide to sell businesses but whatever your reason ends up being, it is crucial to be clear about why you're selling because potential buyers will want to know. You might want to sell your business because you think it's time for a new challenge or you're finding it difficult to reach and find new customers.

How to find buyers for your business?

If you wish to find a buyer for your business, you must ensure that you are using one or more methods to help your business appeal to buyers. You could create a sale brochure which will help you appeal to buyers. In the brochure, you should include details on your businesses USP's, growth potential, customer base and other positives about your business. Alternatively, you could try to find potential buyers on social media or find a business broker that can take control for you. But before you try these things you should ask yourself, do I have any buyers in my network, like clients, customers, or suppliers?

How to value your business that you would like to sell?

Significantly, it is possible to reach a figure yourself, although professionals can also offer you independent valuation. A valuation before you start the process of selling your business can help you understand whether your business is in a good enough position for you to achieve your goals, and if not, you can focus on improving your business.

There are various ways to value your business, one of these includes using the UK's business valuation formula which is as follows: valuation=post-tax profits for the year multiplied by P/E ratio.

But of course, there are many other things to consider when valuating your business rather than only focusing on the formula above.

• Tally up the value of assets (this includes all equipment and inventory.) Also, it is crucial to subtract and debts an liabilities from this value in order to get an answer you can rely on.

• Base it on revenue. How much does your business generate in annual sales? How much is a typical business in your industry usually worth for a certain level of sales? For instance, I'ts usually around two times sales.

• Use earning multiples. You must ensure that you estimate the earnings of the company for the next couple of years. Foe example, if the typical P/E ratio is 15 and the projected annual earnings are approximately £150,000, therefore the business would most likely be worth around £2.25 million.

• Go beyond financial formulas. Instead of basing your business valuation on only number crunching, value your business on factors such as it's geographical location.

GS Verde offers end to end support while you complete the five stages of selling your business. These five stages include, preparation, valuation, buyer identification/sales structure, deal negotiation/completion. Our complete business sale advisory team work as one to help you navigate the journey from pre-sale through to completion.

GS Verde Group also could offer you a free business valuation. We offer expert advice and can ease the stress of selling your business. Getting expert business valuation could not only save you many hours of calculations but also ensure that your selling your business for the correct price.

If you wish to find out more on how to sell a business, please visit https://www.gsverde.group/sell-a-business

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