Most small private businesses tend to be sold on the basis
of a multiple of sustainable earnings or Operating Profits, adjusted for any costs which may be added or taken away under new ownership. This
valuation will then take into account any balance sheet considerations such as external debt, working capital balances and assets such as equipment
and property. Finally, other softer factors will be considered such as the overall attractiveness of the sector, the sustainability of earnings, the
prospects for growth and the disruption likely as a result of the change of business ownership.
Multiples are usually in the range of 3 to 4.5 times of this Adjusted Operating Profit, with most businesses being
in the lower half of this range. Whilst this is not an absolute science, our business valuation methods and our extensive experience of company sales
enables us to assess the value with confidence. Inevitably at the end of the day, it is the offers which count. |
