Business Value

“Valuation is an art, not a science” and “Value lies in the eyes of the beholder”.  Both these statements are true with regard to how your business gets valued.   

There are many assumptions built into valuing a company. A change in assumptions can have a significant impact on the value of the business.  For example, a change in the expected growth rate of your business, adjustments to your baseline cash flow (or EBITDA) for valuation, etc. can impact the value of the business. Therefore, there is no perfect value for your business but rather a range of values that you can expect.  These assumptions are based on demonstrated industry and company performance and expectations.  You cannot just change these assumptions as you wish but you do have some latitude to improve them to your benefit if you can soundly justify the change.

Also, the value of the business depends on the type of buyer and their requirements.  For example, a strategic buyer looking to grow a line of business (for which your business is a perfect fit) will be prepared to provide a higher value than say a buyer who is looking to purchase solely for a financial return.   The type of buyer and their perception of the industry and your company will impact their assessment of value.

We at Distinct Capital Partners have worked on hundreds of transactions and have an excellent understanding of how to best position your business for sale in order to maximize the value you will obtain.