There is no single way to value a business. However, if you are considering the sale of your company, it is likely that you will want to know how much you can expect to achieve from the sale – both for planning and marketing purposes.
Thankfully, most sellers tend to use one of four main methods as the best way of valuing their company, through assessing: price-to-earnings ratio, asset valuations, entry cost, and discounted cash flow. Below, we’ve explored each of these methods, in turn, providing an insight into the businesses that may suit each option, as well as an example of calculations for each.
However, before you get started, it is important to consider the assets and other factors that could influence your calculations, some of which could heavily affect the value of your business.
Valuation FactorsNo matter what valuation method you choose, you will have to consider one or more of your business’ assets and factors.
A highly reputable business operating for over four years and on an international basis. Provides comprehensive drop shipping services and helps clients across the world succeed in the e-commerce sector.
Offers a wide range of fashionable, chic and affordable clothing items for customers throughout the UK and internationally. Retails its products in sizes 8 to 32, maintaining its price point across the range.
Works with a multitude of prestigious clients nationwide and retains a highly skilled, experienced workforce. Strong second-tier management team with the necessary skills and expertise required to manage day-to-day business operations.
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