How do I calculate the value of my business?
There are a few ways that you can calculate the value of your business. You will need to add up the value of your assets and determine the amount of revenue the business makes. One of the more relevant ways to calculate the value of your business is to use earnings multiples or the price to earnings (P/E) ratio.
You can go through a broker, an accountant or other professionals to help in valuing your business or you can do it yourself using ValueRight. ValueRight helps you to get an accurate valuation of your business once you have put in all of the necessary information.
Can I get a realistic value of my business?
If you have the right information about your business, you can get a very accurate value for your business. The sector that a business is in and the current market conditions can affect the value of the business. All of these factors can be considered in order to get an accurate and realistic value of your business.
Most importantly, you will need to come up with a value that a buyer will be willing to pay so make sure you have look at how other businesses similar to yours are valued.
Can I ask an agent to do this for me?
There are agents that have experience in valuing a business and will be able to help you through the process. Make sure that you find someone who has experience with businesses similar to your own.
You will need to provide them with all the relevant information like your earnings and expenses over the years.
What documents do you need?
You will need access to at least a full year's profit and loss statements (P&L) and owner salary and benefit information. You will also need the value of the inventory which will be included in the valuation, alongside any other assets. Your accountant will be able to provide this information for you.
For a more accurate valuation, you can add the last 3 years of financial information and ValueRight will give a more accurate figure as it will take into consideration the growth of the business over the years.
How long does it take to complete the process?
It is a 4-step process and it takes 45 minutes to complete.
What's the cost of ValueRight?
ValueRight is a self-service free of charge to use. At the end of the process, you will receive a PDF file with the Valuation Report.