Value Your Business

Valuations need to be realistic and justifiable but we need to carefully consider the valuation model by applying some lateral thinking. There are the usual and proven methods using tried and trusted formulae but some businesses may have a disproportionate value to certain buyers for reasons that might not be immediately obvious, such as intellectual property, or common clients, for example.

Equally important is to identify where a potential buyer might come from and target them accordingly. Could it be your management team? A customer, or strategic partner? A competitor, or synergistic business? Or possibly a source you haven’t yet considered?

For example, John Knight’s own business disposals came about as follows:

• Advertising agency sold to a client for £1.5m (10x net profit)
• Branded goods business sold to large competitor for £650k (one year’s gross profit)
• Intellectual property brand sold to licensee for £1.2m (based on 3 years’ projected royalty payments – this case study defies any conventional valuation model)
• Greeting cards publishing business sold to large synergistic business for £50k (one year’s gross profit plus stock at value)

Establishing a realistic valuation is key to achieving your sale. We will sit down with you, our valuation expert and your accountants and/or IFA to explore the various methodologies, including any unique selling points which might affect the value for certain potential buyers. Click on Business Valuations for more detail.