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Stuart H
What is my business worth!?
I have a business and im trying to value it for sale purposes the details are as follows.

Previous years profits 2005 £57000, 2006 £ 20000

After a lot of changes the company is now a lot more profitable. Predictions for this year are;

Turnover £2,500,000 Gross Profit £1,250,000 Net Profit £450,000

We predict this to be the trend for the following years with the company averaging .5million net profit.

The balance sheet at the end of the last year showed a net worth of £200,000.

There is little risk in the business.

What would you say the value was and how would you work this out!
Additional Details
We now import some goods, this has raised the GP% by 10% overall. This is why the profit has increased.

We are not definately selling, but an interest has been shown, so we need to know a rough value.

Lady_B-Luck to answer your points, its a manufacturing company selling to schools, so there is little risk as all the bills are paid by the government, the business was established in 1987.

The financial adviser is coming to say hello tomorrow! Just trying to get an idea!
                     
 




Marky
To be honest, I would not trust a proposal that had the profit in 2006 at £20,000 and predicted to be £450,000 in 2007 (more than 22 times greater) withuot seriously going over the books carefully.

If you are going to achieve the figures you suggest, you really should appoint an agent to value and market it.


sam g
Agree with Markymark......

You must be a very good businessman if you can turn a business around by this much. Why are you selling ? Why would you not want to reap the benefits of the work you have put in to turn your company around ????

In terms of a value, I normally look at a business value as 4 x its current net profit + all assets.

So your business (assuming your 2007 forecast is accurate), is worth in the region of £2 Million.


Feeling Mutual
Rating
You need to show the book value of your company, the value of all the assets, and liabilities in addition to revenue information to figure the value.

For example, if your company has £45,000,000 in the bank, and no debt, and a large account receivable, it is worth a lot more than if it has only £450,000 in the bank, and a lot of debt.


rluettjohann
Rating
Depends on what kind of business but a good starting point would be 3-5 times EBITDA (Earnings Before Interest Depreciation and Amortization)


lady luck
More info is needed. What kind of business? What does it offer? What is the current market on what you offer? How do your stocks look (this isn't so much part of it)? How many years have you been open? Who is your primary buyer of the company? Are they looking to buy you out?

If you don't know, then you shouldn't sell it. Chances are if you don't know you will either over estimate the worth and have it sit on the market and kill the business. Or not get what it's worth. With something like this, it would be best to see a financial adviser.

Good luck
Beth


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