Pride of ownership can make it an almost impossible task for a business owner to value their business. Having devoted many years as well as blood, sweat and tears into the business, a business owner may struggle to take an objective view on the value of their business.
The business valuation process can be complex, based not just on your bottom line profits, but a multitude of figures and factors – both quantitative and intangible. Financial performance provides an objective and useful insight into material value and history, but it rarely considers the true business opportunity and intellectual property values.
The bottom line is, your business is only worth what a buyer is willing to pay, but a single offer alone does not demonstrate the true value of a business. A one horse race is a sure shortfall and guarantee not to get the best deal for your business; the more comprehensive the marketing, the more potential buyers you will find.
By engaging more than one buyer you create competitive tension which leads to multiple offers and the power of comparison. This comparison allows a business owner to understand the true value potential of their business and as a result secure the best deal possible.
Knowledge really is power when it comes to selling a business. With a better understanding of the sale value your business might achieve via a controlled exit process, you can progress to sale completion in the comfort that you are not selling undervalue.
Intangible Assets & Intellectual Property(IP)
Goodwill and other intangible assets can form a major part of a business’s overall sale value. These intangibles are often not fully understood by either the buyer or seller yet could hold significant value.
These will include:
- Goodwill & brand recognition
- Business mythologies
Intellectual Property is essential to the growth and protection of a business. The commercial world is truly global and extremely competitive and any intellectual property your business has created over the years (formally registered or not) makes your business unique, increases value and protects it by creating barriers to entry for new competitors.
Establishing appropriate value for IP can be complex. Helping business owners and buyers understand the importance of a business’s intellectual property is imperative in securing the best deal for the seller. We believe this insight gives Vexus an edge on many other brokers in the market.
Influencing your business value
The ability to secure maximum value from a sale can be influenced by:
- Selling at the right time
- Creating / identifying business protection / barriers to entry
- Identifying potential issues that could affect value and addressing them in advance
- Identifying those purchasers that will have a genuine strategic interest in acquiring the business
- Ensuring that the key value drivers of a business are effectively communicated to the purchaser
- Introducing competitive tension into the sale process
- Avoid last minute surprises for the purchaser which could jeopardise the deal
- Resisting last minute attempts by the purchaser to chip away at the price previously agreed
- Ensuring a range of options has been considered to maximise your proceeds net of tax