Working out how much a company is worth?

[twoblacklines]

I am using this company purely as an example.

Say I decide to get into industry x and rather than create a new company it might be easier to buy one that already does what I want to do.

See company "TURBO DYNAMICS" here https://companycheck.co.uk/company/02769439/TURBO-... for their financials.

Given those figures, how much is the company worth when a private individual buys it? What sort of ballpark offer would need to be made? Assuming that their factory is owned by them with no mortgage at the current figures.

Thanks!

[singlecoil]

I get a blank page with that link.

[Doofus]

What sort of purchase? Assets? Shares?

Is it for sale?

[minghis]

I was always under the impression that a good starting point for what a business should be sold for is around 2.5 x net profits. Then adjustments for property rent/value, stock and all that stuff.

But I could be wrong!

[anonymous-user]

The link doesn't work for me either.

It's not really possible to say without a lot more information, i.e.are you buying goodwill, part of the company, the whole company, whether it's a retirement sale etc etc etc.

Companies can be valued at anything from 2-10 x net profits +- any other assets/liablities, but it's very dependent on the circumstances, the type of company and the industry.

[Thankyou4calling]

minghis said:

I was always under the impression that a good starting point for what a business should be sold for is around 2.5 x net profits. Then adjustments for property rent/value, stock and all that stuff.

But I could be wrong!

Not wrong.

It is a good starting point, varies by sector and notoriously difficult to value and buy/sell a trading business but 2.5 x EBITDA is a decent starting point.

[dartissimus]

Small pharmacists were selling out to the big chains at well over 100% of turnover.

Lots of wealthy retired chemists.

[DSLiverpool]

twoblacklines said:

I am using this company purely as an example.

Say I decide to get into industry x and rather than create a new company it might be easier to buy one that already does what I want to do.

See company "TURBO DYNAMICS" here https://companycheck.co.uk/company/02769439/TURBO-... for their financials.

Given those figures, how much is the company worth when a private individual buys it? What sort of ballpark offer would need to be made? Assuming that their factory is owned by them with no mortgage at the current figures.

Thanks!

From what I can see (as a business bloke not a accountant) you have £700k of debt showing and coincidentally £800k of assets . Debt is solid, assets can be ambiguous. This is a 24 year old company that the owners may be taking a shed load out of but to have so much debt after so long seems odd to me. (as a bloke who does not know if turbo stuff has differing financial requirements)

[anonymous-user]

So little information available from the filed accounts that a valuation based on that alone would be a waste of time.

[Ean218]

DSLiverpool said:

From what I can see (as a business bloke not a accountant) you have £700k of debt showing and coincidentally £800k of assets . Debt is solid, assets can be ambiguous. This is a 24 year old company that the owners may be taking a shed load out of but to have so much debt after so long seems odd to me. (as a bloke who does not know if turbo stuff has differing financial requirements)

Nothing sinister there, that looks like a debt covering a fixed asset such as a property. If you then look at the charges register there are indeed two properties.

[DSLiverpool]

Ean218 said:

DSLiverpool said:

From what I can see (as a business bloke not a accountant) you have £700k of debt showing and coincidentally £800k of assets . Debt is solid, assets can be ambiguous. This is a 24 year old company that the owners may be taking a shed load out of but to have so much debt after so long seems odd to me. (as a bloke who does not know if turbo stuff has differing financial requirements)

Nothing sinister there, that looks like a debt covering a fixed asset such as a property. If you then look at the charges register there are indeed two properties.

Are you saying the reason after 24 years that they have such a large property liability is because they have it in their pension (as such its not a company asset ?) also who`s to say they are not balloon valued. I just think its unusual that they owe so much on roofs after so long but I am not a tactical genius with this sort of thing.

[Doofus]

The OP did say that company is only an example.

[cashmax]

janesmith1950 said:

So little information available from the filed accounts that a valuation based on that alone would be a waste of time.

Exactly this - no one uses filed accounts in a limited co, not even for a guide. They are normally meaningless.

[Bertrum]

Interesting you should choose that company.

Owned by the son of former F1 driver Tony Marsh...

He won't be selling it, just in case anyone wonders

If you are looking to buy a company I would be getting a look at their actual accounts (not the ones they file) first.

[Zoon]

Pretty low net worth and cash for 24 years of trading.