Business Valuation Services

Company valuations or an enterprise value ("EV") tend to be based off of a multiple of a financial metric. The most common metrics used to determine the earning potential of a business are multiples of EBITDA (earnings before interest, taxes, depreciation and amortisation), revenue and sometimes assets.

The multiple for a specific company is influenced by its sector, trading and value drivers and position of the business within that sector, as well as the buyer/investor appetite at that moment in time. Buyers will pay more for better quality of management, scalability, intellectual property, earnings track record, cash dynamics, and a lack of dependencies, for example. A buyer will also often pay over the odds if it represents a strategic play and is bidding in a tightly run competitive bidding process.

The EV of a business is shown on a net debt or cash basis. Any surplus cash or debt in the business will normally be negotiated with the buyer by analysing and agreeing the level of working capital, as well as other assets within the business.

In short, yes you can, and this is one valuation technique we use, among others. However, we do not recommend that you simply base the value of your business on another similar sized company in your sector as this can be misleading, particularly as you might not have access to all the relevant information needed, or the source of information may not be so reliable.

Not always. The value of a business is based on several factors, including multiples of different financial metrics that generate an Enterprise Value. We also estimate future cash flows that the business is expected to make and assess the likelihood and risks that this involves. Another technique we use is to determine the Equity Value (the amount that the shares will be sold for) by considering the balance sheet and looking at the level of cash, debt, working capital and non-trading assets within the business.

Yes, when calculating the value of a business, we take into consideration the level of debt, as well as any surplus cash and other assets. This is known as the Equity Value or the amount the shares will be sold for. Depending on your business and how the debt was facilitated, the value of your business and when you can exit will be impacted for a period of time or until this issue is addressed.

EBITDA stands for “earnings before interest, taxes, depreciation and amortisation”. It is often used when determining valuations. The EBITDA shown to prospective buyers is often adjusted for many factors to show the buyer the expected future maintable earnings being acquired. Therefore, if we are selling your business, we will spend a lot of time reviewing the financials, identifying normalisation and maturity adjustments..

Whilst we have specific sector knowledge as a result of the different deals we’ve made happen, we work with many different sectors, so our experience remains very diverse. This naturally means we bring unique insights to our clients, helping them to create robust business exit plans.

Our fees vary depending on the scope of the engagement. Our corporate finance related fees tend to have a large component which is based on the success of a transaction completing. Our strategy advice fees are normally charged as monthly retainer fees or charged on an ad hoc time basis. Our fees are always tailored to your specific needs, ensuring we are completely aligned.