What is My Business Worth?
We Utilize Our Market Expertise to Assess the Value of Your Business
When our clients on the selling side contemplate the sale of their company, the most prevalent question is, ‘What is the value of my business?’ Through our valuation process, we not only furnish our assessment of the most likely selling price for your business but also substantiate it with comprehensive details.
Business valuations serve diverse purposes, encompassing wealth planning, resolution of partnership disputes, tax compliance, and support for litigation.
At Terranova Business Group, our objective is to offer business owners a fair market value, representing the approximate price they can anticipate from potential buyers.
Examining the Financials
Our valuation procedure commences with a thorough examination of your profit and loss statements, balance sheets, tax returns, and other financial records spanning the past three years.
With collaboration from you, your CPA, or accountant, we adjust the financial statements to account for any discretionary or nonrecurring expenses or income that should be included in the overall financial picture.
A primary goal is to ascertain your company’s cash flow, typically expressed as SDE (Seller’s Discretionary Earnings) for smaller businesses or EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for most businesses.
Following that, we routinely assess your balance sheet to determine the net working capital requirements that a buyer would need upon assuming control of the business.
Comparing Similar Businesses
Upon the completion of the financial data review and adjustment, we leverage business sales comparable data for businesses of similar nature to establish a benchmark for valuation.
We utilize subscriptions to three major third-party platforms to gather comprehensive business sales comparable benchmark data, ensuring the utmost reliability in our findings.
This benchmarking process extends beyond mere comparable sales, acknowledging the unique valuation parameters inherent to various businesses.
Exploring Beyond Financial Formulas
In the assessment of your business’s worth, Terranova Business Group employs a distinctive process that involves scrutinizing numerous vital factors. These include, but are not limited to, your industry, competitive strengths, customer diversity, prevailing industry trends, company assets (such as the value of facilities and equipment), capital investment needs, financial data, and the quality of your staff and management team.
The growth potential of your company is also a pivotal consideration in this evaluation.
Taking into Account the Buyer’s Viewpoint
During the valuation process, it is crucial to adopt the perspective of the potential buyer.
Is your business expected to generate sufficient free cash flow, enabling the buyer to recover their investment within a reasonable timeframe? What portion of the free cash flow will be allocated to settling the debt resulting from the business sale?
This data requires meticulous examination to guarantee that the buyer attains the necessary returns for the acquisition to be a viable proposition.
Should these ratios be incongruent, a reassessment of the valuation becomes essential.
Reach Out to Receive a Valuation Opinion
Our M&A advisors, actively engaged in facilitating transactions for both buyers and sellers, uniquely position us with a comprehensive understanding of the prevailing market dynamics. Unlike relying solely on external data sources, we leverage our market insights at Terranova Business Group to provide you with a plausible valuation range.
It’s important to note that in certain specific situations, we may charge a fee for the valuation opinion. This could apply, for instance, if a client is engaged in long-term planning or already has a prospective buyer in place for a transaction. Rest assured, all information and discussions related to your valuation are treated with the utmost confidentiality.
To receive your opinion of value from Terranova Business Group, please click here.