Burning questions from business owners – part one

Published in Insights by Emma Curtis on 1 January 2023

What is my business worth?

In part one of a new series where we address the top questions we get asked by business owners, we take the most asked question of all: What is my business worth?

The short answer is: it is worth what the market is willing to pay for it!

The long answer is slightly more complicated, so let me take you through it.

Our philosophy

In our many years (30+) selling businesses we have developed one golden rule: we never take a company to market with a price tag attached. This is one of the biggest mistakes a company can make, as it will put an upper limit on the offers you receive. Worse, potential acquirers use this number as a jumping off point for negotiations – downwards. Shareholders going to market with a price on their business rarely realise this price.

Our approach may seem unusual, and we do get asked a company’s price by prospective acquirers. Our answer is always: what is it worth to you? We encourage the potential buyer to consider the effect combining your unique strengths, capabilities and opportunities with theirs will have on the growth and profits of their company going forward. And we let them know that they are up against competing buyers.

Our process works because we take on companies that we feel can offer something to an acquirer, ones that will be sought after. Companies that an acquirer would be daft to pass up on.

A competitive environment

With our competitive process, we let acquirers know that they are bidding against other buyers. With the pressure on to submit their best offer for fear of missing out to someone else, we are able to negotiate upwards, rather than down.

Because of this, we can only ever tell you what your company is worth once you have accepted an offer. And we will never lie to you – going to market does not guarantee a sale. But whatever offers you receive, you can rest assured they are the best the market will provide at that time.

 

To learn more about business valuations and our process, take a look at this video from one of our founders, Dave Rebbettes.

 

If you are thinking of selling your business and would like to explore your options with Kingsbrook, please get in touch, either by email at [email protected] or call us at 01635 736741.

Published on 1 January 2023 by

Emma Curtis

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