The value of your business is affected by a number of factors. The level of demand in your particular market can affect the value of your company, along with the state of the economy and interest rates. If your business is in a sector which is currently in demand, the likelihood is that similar businesses may be on the market, and as demand increases so does the value.
Financial management, both past and present will affect your business value, especially projected cashflow and profits. Requiring capital expenditure in the near future may also affect the value of your company. Intangible assets play a huge role in the market value of a company, especially strong customer relations as this can determine future profitability. Goodwill and patents are also relevant to the value of a business.
Assets and liabilities may have a serious effect on the value of a company. A business which has a high level of debt and liabilities isn’t likely to instil a high level of confidence in a potential purchaser for your business. However, an order book which is full may inject some positivity, affecting your business value. A business will also be valued on the success of the management team and the performance of key employees.
There are a number of methods which can be used to value a business, and a potential buyer may use more than one method. However, the price offered for a business is open to negotiation by both interested parties.
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About The Author
An experienced business and finance writer, sometimes moonlighting as a fiction writer and blogger.