You’ll need to consider a host of factors to determine the value of your business to an outside buyer. Some you will control, but many more are market-driven. In addition, there may be a significant difference between the average valuation of a business in your industry–and what your individual business is worth.

We provide timely and accurate company and market evaluations through our partnership with Capital IQ. Thus, we can generate valuation data on over 47,000 public companies, 822,000 private companies, 12,000 private capital firms, 370,000 transactions, and 1,000,000 professionals worldwide. Capital IQ is deployed at over 2,200 client firms including many of the world’s most successful investment banks, hedge funds, private equity firms, consultants, and corporations.

Using sophisticated reporting and analysis tools, we offer realistic assessments of what buyers might be willing to pay for a business comparable to yours. In fact, we can generate customized reports that will give you a precise estimate of transactions that very closely match your company’s size, type, and industry. Click here to make a confidential request for more information on these Capital IQ valuation reports.

Your individual business valuation

To determine more precisely how much a prospective buyer would be willing to pay for your business on an additional set of complex and frequently overlapping variables.

Here are some of the most important variables that will affect your individual business valuation:

• Many business owners have not structured their companies to optimize salable value. Unless owners make significant structural changes, their potential selling price will suffer.
• Because cash is king, all buyers will take a careful look at your earnings and cash flow. If you have been intentionally minimizing earnings, the likely purchase price will be less than optimum.
• The industry and market in which you operate have a dramatic effect on the multiples that purchasers are willing to pay.
• If private equity is free-flowing in the current market, your business will fetch a much higher price than when money is tight.
• Your pattern of growth whether consistent or uneven has a significant effect on purchase price.
• How you are performing versus industry averages and specific competitors is a key factor in buyers’ evaluation.
• If you have a strong management team in place, your business will be more attractive to buyers.
• The value of your business will be much different to a strategic buyer–perhaps a major competitor–than it will to a financial buyer cares mostly about your bottom line.

How to obtain the best price for your company

Your challenge then is to optimize the variables that you control while developing a comprehensive understanding of the external variables. Even if you have decided to sell, you may need to spend a year or more getting your business in optimum shape for sale.

• Is it time to sell your business?
• How to get your business ready to sell
• How to choose an M & A advisor
• back to Selling Your Business