Valuing a business for takeover
If you plan to sell your business, you first need to know how much it is worth. The value depends on several things. Read how to value your company.
What is the value of your business?
There are several ways to calculate the value of your business. These methods are based on financial data of your company, but other matters also determine the value, such as goodwill.
The value is not the same thing as the price
The value you calculate is not the same as the price you agree on. In the end, the price is the result of negotiations between 2 parties. It depends, amongst other things, on:
- motives to buy and sell;
- negotiation techniques and skills;
- alternatives for buyer and seller;
- possible synergetic advantages;
- the way the purchase sum is payed.
During negotiations, try to step into the potential buyer's shoes: what advantage do they see, and how much are they willing to pay for your company. You can often influence non-financial criteria that help determine the price.
Advice for setting a price
Advisers such as bookkeepers or accountants can help you value your business. They can also help you find the best method to calculate the value. They know the pros and cons of the different methods.