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SELLING YOUR BUSINESS 29 What's it all worth? Understanding the complexities and technicalities behind the value of a business is not easy. Here we provide some clarity and some advice on how it can be done ■ The length (and strength) of the this isn't always the view of others. But there are some common factors that will provide a value that can give you reasonable confidence. These include: ■ The company's track record. ■ The quality of its clients. ■ The quality of the management team and other key staff. not properly resourced - auto-enrolment is a legal requirement for businesses and a buyer will not wish for this to be an added layer of bureaucracy and cost that they will be responsible for. ■ There is a weak management structure - potential buyers will be future order book. ■ Recent investments (machinery/IT). ■ Potential future profit trends. ■ The value of its net assets (including property). ■ How competitors are performing. DEPRECIATION FACTORS There are a number of factors that will de-value the business and should be considered carefully by any seller. ■ The company pension scheme is deterred not only by lack of strength or skills within the management team, but also if there is evidence of an over-reliance on the knowledge the owner provides. ■ An over-reliance on key clients - a buyer will be concerned if the business is existing on a small client base. They will be looking for long-lasting contracts with quality clients, a strong order book and potential for future contracts or other revenue-generating activity. ■ Old and badly performing equipment/ machinery - a lack of investment will reflect badly on the value of the business. ■ High staff costs - buyers will want to know that the wage bill and future salary expectations of employees are manageable within the constraints VALUATIONS AND MULTIPLES ©shutterstock.com W hat a company is worth - or what a valuation is calculated on - depends on various factors. It's no surprise, then, that a growing business in a sector with good prospects will be valued more highly than a more mature business in a declining industry. You will never truly know the value of your business until it is sold. Putting a value on it before a sale has a degree of subjectivity because this involves taking a future view - and  http://www.shutterstock.com

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