If you’re a business owner, you may have undoubtedly considered the questions of, “What’s my business worth? Can I sell it for an attractive price?”.
Whether you are actively seeking to sell your business or simply wondering whether the sale of your company would provide the financial security you envision, the Ascenum can help. We provide online business valuation tools that can help you better understand how company valuations are derived and enable you to discover the factors that will drive your company’s business value. You can see how your decisions would impact your business valuation, so when the time is right, you can realize the benefits from the labor and love you’ve put into your business.
How to Value Your Business – The Basics
So how are business valuations derived? There are a variety of approaches, so let us look at the most common ones.
First, no matter how technically sound one’s approach to business valuation, it’s ultimately about what the buyer is willing to pay or what the market says it’s worth. It’s not unlike a home purchase. Some years prices skyrocket, and it’s a seller’s market. In other years, it becomes a buyer’s market. Our business valuation tools will give you a basis to gauge what your company is worth. If selling your company is the goal, you will better understand how the numbers are derived, but be ready to be flexible.
Second, business valuation is typically an earnings-based exercise that also takes into account your tangible assets like inventory, any machinery, perhaps the business building you own, or patents. Our valuation tools also capture intangible items that are harder to put a price tag on like branding power in the marketplace, your company’s secret sauce, or a trade secret underlying the coding in your software technology.
The discounted cash flow (DCF) approach is a standard most often used to determine the valuation of mid-sized companies. It’s a method that projects out future earnings, reflective of various factors such as future sales growth and profit margins. A risk-adjusted cost of capital is then applied to derive the present value of those future cash flows in determining an estimate for the business value.
For a representative small-sized business, the “multiple of earnings” valuation approach is often utilized that incorporates specific detail regarding business characteristics and the sector in which the company operates.
Let Ascenum Help
We’ve laid out some of the fundamentals behind business valuation here, but you’ve likely caught on that there is a good deal of nuances.
If you intend to sell your company or maybe you are beginning to think about retirement, why speculate on ballpark figures about what your company might be worth. Why leave that to chance? You certainly don’t want to risk undervaluing your business! This area is where the Ascenum can help.
You don’t have to wonder anymore about how to value my business. As a Member of Ascenum, you will have access to leading online business valuation engines. Members can use our digital online tools in private, without unwanted solicitations, or divulging FEINs, account information, or paying an expensive fee.
Ascenum was founded to not only advocate for the private business owner but also to provide them with state-of-the-art digital tools to discover what their business is worth.
Ascenum also provides our private business owner Members with a community platform, Learning Center, and Marketplace that can connect them with leading specialists to help Members capitalize, grow, and when the time is right, sell their business for maximum value.
Learn more about how Ascenum can help set you up for success. Discover the passion our founder, T.J. Letarte, has for providing small and mid-sized business owners with the help they need when they face the most significant events throughout their business life cycle.Recommend0 recommendationsPublished in Ascenum Blog, Business Valuation