If you are considering the sale of your company, it is important to make a thorough assessment of the potential value and saleability of the company before you commit to a sale process.
Valuations (often measured in terms of multiples of profit or revenue) in most industry sectors appear to be increasing as business confidence and performance improves. But valuation is not just a matter of multiples – there are a number of questions relating to the company or the market that need to be considered before determining an appropriate valuation.
Market characteristics and market position
1 Operates in a high growth, mature, or declining market?
2 A unique / niche business or one of many players?
3 High or low barriers to entry?
4 Market share and competitive environment?
5 Opportunities for international growth?
6 Opportunities to introduce new products or services?
7 Historic and current financial performance (sales, margins, cash generation)?
8 Forecast growth rates over the next 3 to 5 years?
9 Predictability of sales and level of recurring sales?
10 Strength and sustainability of profit margins?
11 Balance sheet strength?
12 Future capital expenditure and working capital requirements?
Brands, intellectual property and know-how
13 An established recognised brand?
14 Owns intellectual property?
15 Levels of know-how and expertise?
16 Structure and quality of the management team?
17 Does the business rely on one or two key individuals?
Customer and supplier relationships
18 Does the company enjoy long term, stable relationships with its customers?
19 Any reliance on one or two large customers or suppliers?
20 Any long term customer or supply agreements?
These are just some of the factors Bracebridge would consider before arriving at a valuation of the company. We would also look at the saleability of the company and identify potential issues that should be addressed before commencing a sale process. And of course we would look at the likely buyers and make an assessment of likely buyer appetite.
Why don’t you give one of us a call to tell us about your company and we will provide you with an initial assessment of value.