Video 8 – Your Business Valuation Range

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Rob Goddard:

It’s really key to get a business value, today’s value or valuation range, but how important have you found that to be in the real world?

Mike Whittle:

Yeah, a slightly controversial answer I think is that valuation is only as good as the opinion of the person giving it. And I think from where we sit, we often say to people, we don’t value businesses. Of course we understand the range in which valuation should exist and we understand how to create valuation of a business, but we say to people often we will test the market on your behalf. Our valuation really only extends to realism in the seller’s eyes. What we’re looking for is to understand whether or not we are likely in that situation, based on the specifics of the business we’re looking at, whether we’re likely to be able to achieve and exceed the seller’s expectation. That’s all we’re interested in from a valuation point of view.

Rob Goddard:

Good, Steve?

Steve Barry:

Yeah, no, I agree. I think the statement of reality is most business valuations are done on the basis of history.

Rob Goddard:

Yeah.

Steve Barry:

And again, people have heard me say before, people don’t buy history, they buy the future story of the business. It would also be fair to say, however, that one of the capabilities that we regularly bring to a client’s transaction is to do a very detailed sweep of the sector or sectors within which they trade and operate through our research team here at Evolution.

Steve Barry:

We look internationally, both in the actual sector and in complimentary sectors and financial acquirers and investors to look for comparables against which we could assess what that business might be valued at. But the reality is exactly as Mike said, the only true test of value is what somebody is prepared to pay once competitive force takes place and you see how much they want that business, that’s when you see true value.

Rob Goddard:

Valuation is in the eye of the beholder.

Steve Barry:

Correct.

Rob Goddard:

Just to corrupt an old adage.

Steve Barry:

Yes.

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Alternatively, If you would like to discuss a potential business sale with one of our Client Directors, please either call Amanda on 0118 959 8224, email agale@evolutioncbs.co.uk or Make An Online Enquiry.

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