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Bigyin said:
there are some commonly held basic formula for working this out that they would know.
One simple acid test I have seen to provide a basic min value is the turnover divided by the contractual notice - does not include assets or good will.
For example if you t/o is 100k and everyone's on a months notice the worst case value is £100k/12 =£8.33K on the premise that post takeover, everyone could leave the new owner.
There are other sliding scales valuations that provide you with a % of the value each month from the new owner.
Obviously assets are at written down value and subject to negoitation.
Selling a business that provide only services (ie labour) can be hard to value as existing customer base could just go to another provider
Hi Lisa, did you manage to sell your business? If not I've got a few clients who might be interested depending on where you are and your turnover. I dont charge any fees as my clients pay for me and I'm quite happy to offer free advice including valuation.
Its so easy to over value, some agents recon its worth the turnover, other agents base it on 2 time profit but the true value is based on a thing called Ebitda but this only works for large companies. Be aware of over valuation by agents who then charge you a fee upfront (sometimes called marketing fee) and then never sell it for you.
Good luck anyway Ian
This year i made the point of only taking on new jobs that were fixed contracts and converting all my existing one from casual jobs to contracts, as the situation your in now would be so much easier as your cant sell casual work but you can sell contracts to other companies, similiar process when businesses go bankrups (mistake me if im wrong), but you can see the less complicated situation with having all your jobs in writing and making shure there legal, i know its not always possible many clients feel they like the freedom to choose companies and thats fine from there point of view, but to us we need the security so they cant jump ship whenever they feel like it. So im not shure how you would price casual work( not in writing) or if you can sell them. ?
Yes you are right, if you have contracts with councils, blue chip companies, housing associations etc with a fix term / value (needs to be more than a year, but some are available for 5 to 10 years +), then these have a value which can be calculated. Casual work including standard domestic maintenance and landscape construction is more difficult to value, but don’t think there is a standard valuation, I use various methods but a value of a company is what someone is willing to pay for it and what you want to sell it for. I’ve been involved in multimillion-pound acquisitions where the name, workload and geographical location was worth a lot, others have been a lower value where the company value was calculated on the potential, which sometimes can be very low. Talk is cheap, find out as much as you can but don’t forget that a sale is only a sale once you have the money in your bank account and don’t put up any money up front no matter how much they promise they will get for your business.
richard davenport said:
Who said the client need know, sometimes the old owner carries on working on the "tools" and therefore the client still see's the old owner, other times the original owner says they are taking on new staff and then blends into the back ground. Clients are normally happy to go on your recommendation that the new owner is OK. Don’t forget, it’s the new owner that takes on that risk.
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