That is a question we are often asked at The 86 Group. The answer is it all depends…
When doing your own research, be very wary of anyone telling you what your business is worth without doing a thorough evaluation of the company, its earnings, its end markets, its growth prospects, its key employees, and the most important piece of it all – a review and documentation of your intangible assets.
The value of your company will be driven by several factors, including (but not exclusively):
- The history of the business
- Your strategic growth plans
- The company’s ongoing efforts to stabilize and improve earnings
- The quality of your financials
- The industry you are in
- Your company’s market share
- The company’s five-year pro forma
- Quality and depth of the documentation you provide buyers
- The value of its intangible assets (this will vary from buyer to buyer)
But the ultimate value of your company will be driven by how much a willing and informed buyer will pay for the opportunity to participate in your company’s future. And as mentioned above, this will depend on the buyer, their confidence in your projections, and ultimately how the assets they gain will help their business thrive. The old 1 + 1 = 5!
As you look at the list above and begin to consider your company’s value, one critical issue stands out: Unless you have sold several businesses in your career, you will need guidance and advice to locate an optimal pool of buyers. This is an art and a science, and something our team with The 86 Group – a Generational Group company, is extremely experienced at.
In fact, no lower middle market investment bank has sold more companies over the past decade-plus than Generational. You can review a sampling of our closed transactions here.
If you are interested in learning more about how to value your business in today’s market, schedule a confidential consultation today, we’re looking forward to helping you with one of the biggest opportunities of your life.