How to value a business?

[iMike]

Hey guys,

Still working at the Karting place and enjoying it, definitely focused on taking the place over at some point now.

Could someone advise me on how to value the business? I don't have a clue how to and haven't been taught it before, it's a LTD company by the way if that helps?

Regards
Mike

[shadowninja]

Need to speak to an accountant.

Or get a copy of Practical Business Valuation from www.forumbusinessmedia.co.uk which seems hellishly complicated.

[donz29]

Hi Mike,

Business values are generally based on x multiples of net profit - profit after all costs before corporation tax - have been deducted. The 'x' varies depending upon the sector.

Any assets the business has that are included in the sale such as karts, land, lump sums of cash in bank etc need to be valued and added to the sale price.

Finally there could be a goodwill payment agreed, which pays the existing owner for the reputation they have built up in the business and the ongoing business that should be generated from that reputation.

Another way to look at it is if you bought the business, how many years would you be willing to wait until you recouped your investement and start making a profit on your investment? The longer the time taken, the higher the risk!

Like anything else for sale, a business is only worth what someone will pay for it.

[iMike]

Thanks for the help guys,

I'd love to get rid of everything there and just start again, new karts, new office, new diner etc.

Looks like i'll need to put together a great business plan when i'm 18 and make my way to the bank, hopefully, the economy might be recovering then and we can all enjoy another boom.