The Business Valuation Guide FAQs

Business Brokers are able to guide you through the (often complex) process of selling your business. They can find a buyer for your business, facilitate the sale transaction and get the best deal for you. They play a key role in pricing, marketing and negotiating on your behalf, and will help you navigate the legal and financial complexities to make the sale process smoother. Choosing the right broker is important – they should have expertise in your business sector, as their knowledge of your market will provide a clear advantage when identifying potential buyers and getting you the best possible deal.

Intangible assets such as trademarks, brand value, reputation (goodwill) and intellectual property can play an important role in the success of a business. These assets often represent future growth potential and competitive advantages, which can drive a higher valuation for a business depending on the specific industry involved.

Economic factors can play a significant role in determining a business’s valuation. In a thriving market, some businesses may achieve higher valuations due to increased demand. Conversely, during economic downturns valuations may drop if profitability and growth prospects diminish. Of course, the level of impact varies depending on the specific type of business and industry involved.

Selling your business is a huge decision and, for many business owners, an emotional one. Finding the right buyer is often more complex than finding someone willing to pay your asking price and it’s important at the outset to identify your ideal buyer profile. Alongside the financial aspects of the purchase, your preferred buyer profile could include their approach to running your business in the future and will be affected by your personal objectives for the sale.  Working with an experienced professional adviser to take you through the process from initial instruction through to completion will help you clarify your criteria.  They will then undertake the process of researching and identifying (matching) potential buyers for your review.

To achieve maximum return on the sale of your business, you need to consider how to add value to your business. Your strategy will need to take account of your timescales along with your personal and financial objectives. The first step in helping you achieve maximum value is to understand the market value of your business – does it match your expectations? Use your Business Valuation Guide as your starting point, giving you a valuation band based on a few simple questions. When you are ready to take the next step, a detailed appraisal of your business by an experienced professional will provide you with the opportunity to discuss your objectives, understand current market price and identify practical ways to add further value.

The simple answer is as soon as possible. Once you are considering the possibility, you need to give yourself time to prepare your business for sale. Start with our Business Valuation Guide and when you are ready to take the next step, talk to our advisers who can arrange a detailed appraisal of your business and explain the sale process. For any business sale preparation is key, including getting the right advisers on board to guide you from instruction right through to a successful completion.

The process of selling a business varies depending on the type, size and industry of the business, and can be impacted by wider economic conditions. As a rough guide, we suggest around nine months to one year from instruction to completion. Talking to a professional adviser can give you a more accurate idea of your timescale based on their experience of your sector.

The Business Valuation Guide is completely free.

We understand that selling your business is a major decision for any business owner – and a very personal one.  It’s important to understand your objectives and we believe in the importance of a face-to-face meeting for a decision of this kind.  So, if you are ready to consider the next step, we will arrange a detailed appraisal of your business and answer any questions you might have about the sale process.  We can arrange a confidential, face-to-face consultation within 48 hours of your enquiry.

It’s often better to sell when your business is on an upward trajectory or at its peak. Buyers are attracted to growth potential and will pay more if they see a strong upward trend, rather than a stagnating or declining business.

A business appraisal is a comprehensive process assessing the worth of a company based on a wide range of factors, including current and future financial performance, assets such as property and equipment and intangible assets including reputation and goodwill customer base, market conditions, economic factors, competitors, location and buyer appetite in the specific market.  Through their technical expertise and experience, an appraiser will determine the market value of a business, providing an essential guide for business owners to make an informed decision and set an agreed market price for their business sale.

Industry-specific factors such as market size, trends, growth potential, competition and the regulatory environment are critical in determining the value of a business. For example, a growth sector may attract more interest from investors leading to higher business valuations than those in declining industries with limited future prospects.

The value and price of a business are distinct concepts. Value is the estimated worth of a business, while the price is the amount a buyer is willing to pay for a business. This is the monetary amount agreed upon in a sale, and may be higher or lower than the value.

Even if you don’t plan to sell your business soon, it is wise to have an exit strategy and to devise your plan as soon as possible. This will ensure you are prepared for unexpected events, such as changes in personal circumstances or fluctuating market conditions, ensuring that your business and personal goals are safeguarded. Having an exit plan in place will enable you to implement strategies to increase the value of your business and prepare for a successful future sale and transition.

EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization. It is widely used in the valuation of businesses in the UK as it provides a clear picture of profitability and offers a standardised view across businesses.

It is possible to sell a poorly performing business, but of course the price you achieve may be less than you hope for. For example, some buyers seek opportunities to acquire failing or poorly performing businesses as part of a turnaround strategy. It is important to seek advice and get a full business appraisal, so that you understand the options available to you. Depending on your personal objectives, you may be looking for a ‘quick sale’ or you may decide to delay and focus on building value to receive improved future offers.