Originally written by Rupert Cattell on Small Business
Valuing your business for sale
I have been selling businesses for over 35 years and have by now probably sold more than 4,000 businesses. Valuing a business for sale is a key question for any small business owner. Obviously the first question all vendors ask is what’s my business worth?
The pat answer is what someone is prepared to pay for it but there are a number of useful methods that can refine and bring logic to the answer. We sell businesses worth anywhere between £100,000 to £7m and so what I say below doesn’t necessarily apply to higher value businesses.
Be realistic from the outset
In their heart of hearts it is my experience that most vendors have a pretty fair idea of what their business is really worth. They are really looking for affirmation from a broker. There are brokers who will prey on the vendor’s greed to get an instruction by suggesting a ridiculous price, or a vendor will be pricing his business on what he needs rather than what it’s worth.
I also often have the conversation with a vendor in which they say “let’s start high, we can always come down”. None of