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business valuations

Putting a value on your business can be tricky. Whilst our accepted valuation methods will give you a good idea, ultimately your business is worth what someone is prepared to pay for it.

why value your business?

Typically a business might only be valued once it’s ready to be sold, but ideally it should be done more frequently and here’s a few reasons why:

  • selling your business

    If you want to sell your business in a few years’ time, then now is the time to value it. You’ll then have a realistic figure in mind, and we can work with you to improve on that figure to maximise the value.

    You’re also better placed to take advantage of any opportunities which may present themselves in the meantime.

  • incentivising your team

    If you have key individuals who are critical to the business then why not introduce an incentive scheme whereby they’re able to have a share of the increase in value they generate for you.

  • needing finance

    If you are raising finance for expansion, lenders may ask for a valuation to benchmark the company against its future value.

  • reorganisations

    It may be sensible to reorganise your company into different entities, perhaps with different ownership structures. If so, you’ll need a valuation to be able to carve up the business fairly.

  • family and estate planning

    The unexpected happens and if you passed away your family would need to know what your business is worth. It’s going to be easier for you to keep an up-to-date valuation, rather than your grieving family dealing with it at such a difficult time.

  • We’re also asked to perform valuations for companies throughout Staffordshire, Derbyshire and Cheshire when families face other issues such as divorce.

how is a business valued?

There’s a variety of accepted methods for valuing a business, and we would use the most appropriate one for you.

Business valuations are often based on a multiple of profit, and that multiple would depend on the sector the business is in. We also take into account other factors such as:

  • past performance
  • future forecasts
  • management team
  • quality of customers
  • niche products
  • intellectual property
  • how efficiently the business runs without you, etc.

Once we’ve valued the entire business we would then apply an appropriate discount for a minority interest or if just part of the business was being sold.

how can Mitten Clarke help you?

Once you have our baseline valuation, we can work together to improve your profitability, and in turn your valuation.

Our pre-sale planning advice also means that you will present the business in the best possible light, and let’s not forget your tax position. Good tax planning is essential if you are selling or reorganising – it makes a dramatic difference to the amount of tax you pay, and when you pay it.

If you’d like to learn how to value your business, or want more information on how we can help you, call one of our directors for a confidential call or email us at today!