What is my business worth
“Market value (Business Worth) can be defined as the highest price of a commodity in terms of dollars which a ready, willing and able seller not forced to sell, will accept from a ready, willing and able buyer not forced to buy, both knowing all facts regarding the property”. (Hawkesbury University – VA101A)
Capitalisation of future maintainable earnings (“FME”) or Return on investment (“ROI”)
“FME” is determined by reviewing the financials of the business using an average of years and returning to earnings before taxation depreciation, amortization and interest (EBITDA). Additional add backs are included for abnormal trading expenses.
“ROI” percentages are drawn from industry data sources to determine the rate to capitalize the FME to determine the worth. These are sometimes simplified to multiples as well.
Other factors that can influence your business worth
There are several other factors that should be taken into consideration of the business worth including but not limited to:
- Value of stock
- Fixtures and fittings
- Plant and equipment
- Work in progress
- Rental lease
- Industry trend
Contact CPI Business Sales for a review of your business worth.