What drives value?
the Numbers
The biggest driver of any valuation is the earnings. The more you make, the more your business is worth.
That, of course, is an over-simplification. The devil is in the details; the quality of your earnings matter just as much. And this is where we go deeper on the analysis, into cost control, margins and historical expenses to name a few.
the Context
Sales and revenue must all be taken into context based on the environment which the business exists.
Employees, owner-role, supplier relationship, customer diversity, industry trends, economic factors, regulatory changes are just some of the drivers of value in the business acquisition market.
Establishing an accurate price
There are three primary methodologies to establishing values.
- Sales Comparison - by taking comparable stores sold in the past
- Earnings - by normalizing your earnings to industry standard
- Net Assets - focusing on the assets of the business through balance sheet analysis
We use all three to build a comprehensive analysis and generate different perspectives, after which we take the most accurate combination of these figures.
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