At Acuity Advisors we understand that a business valuation cannot simply be obtained based on past trading history as the value of a business for an acquirer is in the future revenue expectations
There are many different methods of business valuation but when it’s time to sell your business, it’s really important that you get it right. Business owners often come to us as they are keen to understand what their business is really worth and how they can ensure that the business valuation is both accurate and realistic? They are keen to portray their business in the best possible light for future acquirers.
The pitfalls of traditional business valuations:
Accountants and purely financial experts have a valuable role to play in accessing a business valuation as they will consider the past trading activity and current position of the business and come up with a view. However, the real value in a business for an acquirer is the future revenue forecast as that is what will have an effect on their future business growth.
For this reason, at Acuity, we undertake further analysis in the form of:
- Comparable transaction analysis – this takes into account historic deals in comparable, or adjacent, sectors
- Comparable company analysis – this refers to market valuations of comparable businesses listed on the global stock exchanges (where available)
- Discounted cash flow analysis – this requires access to detailed future forecasts
For companies with revenues of less that £10 million, this information is sometimes not available. In these situations, we take account of historic average prices across the wider global market and take into account the relationship between multiples paid and the relative size of the transaction and develop a business valuation based on this data.
Already received an offer?
If you have already received an offer on your business, you will need a strong, reliable partner in your corner to give you the time and support to make the right decisions. As you can see, we are in the business of providing realistic yet future-facing business valuations.
A conversation is never wasted. We’re confident that we can give you all the help you need, but we’ll tell you if we think there’s a better option for you.Get in Touch