What are the benefits of a business valuation?
We are often asked about the main benefits of having a business valued, especially if you are not yet ready exit or sell your business. We asked Matthew Burns, our Head of Corporate Finance, to take us through some of the main benefits that business owners gain through having a business valued by an independent business valuations expert and how these help.
Matthew added, “Getting a business valued can help in a number of scenarios:
• If and when a shareholder wants to exit the business, getting a business valuation at this point really is essential.
• You might have received an offer for your business – if this is the case you will want to know that the offer is reasonable – an independent business valuation will help you with this.
• You might require an independent business valuation if you are having to make a probate application, if the business is part of a divorce or indeed any other other unforeseen life changing experience.
• A company valuation can also be used as a strategic tool to help with business growth.
• Some business owners seek a valuation out of pure curiosity. If you have spent many years building your business, you might just want to know what it is worth. You might want to assess whether your hard work is paying off”.
I think I know what my business is worth, do I need a professional business valuation?
It is surprising to note that many business owners think they know what their company is worth, but this is often based on a vague notion of how a business valuation is arrived at. Knowing what your company is actually worth can have many benefits:
1) A professional independent business valuation will provide a valuation foundation for where the business currently is based on trade to date
2) Your valuation will act as a reference document for how to get to a target valuation you set
3) A formal business valuation will help you formulate strategic future planning and identity key value drivers to measure performance
4) Should an interested party come along seeking to acquire part or all of the business, if you are prepared, and already possess an independent business valuation, it will allow you to quickly gauge whether their offer is worth considering.
RPGCC carry out many valuations each year, across a wide range of industries and sectors. We have access to databases that provide information on private sector deals, which can be difficult to source through other means. Our Corporate Finance team use this information to understand what valuation multiples are being paid for other businesses in your industry sector and this helps us to produce credible, benchmarked valuation conclusions.
What type of business valuations do RPGCC offer?
Our Corporate Finance team provide 2 types of company valuations:
A) Our standard business valuation report sets out the methodology used and how we reached our conclusions
B) Valuation Plus – this business valuation offers the same information as above, but also sets out the specific valuation drivers, with guidance on changes for you to action which could enhance the company value in the coming months.
Of course there are many more than 4 benefits to having a business valuation carried out.
If you would like to discuss our business valuation services, or indeed how we might value your business, or help you with any change in the status quo in your company, increase the value of your business or help you plan for an exit, please contact our Head of Corporate Finance Matthew Burns at mburns@rpgcc.co.uk.
