Do you understand how to value a company? If you are considering selling your business, before you enlist the help of a small mergers and acquisition firm or merchant bank, you should have an idea of your firm’s business value, i.e., what your company is worth. If you intend to use a broker or other entity that is not a financial firm or that does not employ finance professionals, it is recommended that you obtain a formal, involved business valuation to truly assess the value of your business objectively. This will typically cost you several thousand dollars or more, but it can be well worth it, especially if there are multiple owners or any concerns about fair pricing.
However, if you just want to obtain a general assessment your business’ value to help you determine where you are at now and then use that valuation determination, there are several different business valuation methodologies you can use. Some are more complex than others, but a few are relatively straightforward. If you need assistance with the numbers, you can reach out to your financial staff or enlist the help of a financially-savvy friend.
The video below, 3 Ways to Value a Company, provides 3 such methodologies.