business valuers

[WarnieV6GT]

Can somebody recommend someone to value my business ? It's just a coffee and sweet shop so nothing major, just want someone to give me an honest appraisal so I can look into selling up.

I've seen some retail businesses local to me for sale at figures that seem well wide of the mark, hence why they're still for sale now after being on the market for up to a year. So I want to avoid the 'bullst figures just to get your business' type firms if possible.

I'm based in the west midlands if that helps

[Thurbs]

You should be able to work it out yourself easily enough.

Value of assets (cash / property / stock / IP) + a multiplier on revenue or profit.

An offer will also take in to account contract liabilities, risks and replacement of any management leaving as part of the sale.

Finally other businesses may also consider other factors such as taking out competition, diversifying, expanding the location, integrating and merging in to another business etc.

What I don’t know is what multipliers are relevant to your market. I have seen businesses sell for 1 x revenue, I achieved 8 x EBITDA and was involved in a business which was 13 x EBITDA (but that was a blindingly good deal).

[trickywoo]

This won't sound helpful but its worth what someone will pay.

People won't pay much premium over tangible value because at some point it would be easier to just set one up themselves than pay goodwill to have one up and running.

In many ways a clean sheet is more attractive than a going concern for a business like that.

[jonby]

trickywoo said:

This won't sound helpful but its worth what someone will pay.

People won't pay much premium over tangible value because at some point it would be easier to just set one up themselves than pay goodwill to have one up and running.

In many ways a clean sheet is more attractive than a going concern for a business like that.

THIS ^^^

I am a valuer by trade and I value businesses and their assets, often to then market and find a buyer

There is a huge difference between the theoretical value of the business and what is achievable in the real world

OP is quite right about being wary of the typical business agent who values high but doesn't sell - they make most of their money from the valuation fee

Oh and I'm not pitching for business myself ! I work in the insolvency sector

[sleepezy]

trickywoo said:

This won't sound helpful but its worth what someone will pay.

This - every day of the week

To put it into context I am currently in the US helping a UK investor buy a business.

The target is loss making, and has run out of cash. I am only engaged to assist with the onboarding process, but have told them I don't think they should be paying anything like they have agreed on (in the 10's of millions of $ if you include deferred consideration). The seller won't sell for less than the initial purchase consideration - I understand this as it is what he needs to be paid to come out 'clean' - anything less and he might as well just close down.

Nevertheless, my opinion is that they would be better off spending their cash building from scratch.

But it's falling on deaf ears - the reason being that they perceive the market to be on the brink of a major shift/expansion and they cannot afford to miss out on the initial change.

So the perceived value to the acquirer is huge - and bears no resemblance to any valuation that would be achieved through normal/traditional methods.

[srebbe64]

Three things dictate a company's value:

1/ Profit. But bear in mind a new owner is buying tomorrow's profits not yesterdays. So there's a degree of subjectivity. That said, many people will look at average historic profits and apply a multiple.

2/ Commercial risk. High risk means low price low risk means high price. 'Risk' is somewhat subjective.

3/ Bidder competition. Lots of buyers means high price. A couple of tyre kickers means low price.

As such, 70% of a company's valuation is probably subjective. It's worth whatever anyone is prepared to pay!