"How Much Is My Business Worth?"
That's the single most common question we hear from entrepreneurs.
It's a very pertinent question, because rational business valuation is the foundation on which all good planning depends. Starting with too high or too low an estimate of the value of your business can adversely affect the strategic decisions you'll make.
However, business valuation is not an exact science. There are many software programs available that can generate a "number," and provide a verbose rationale for using the number as a business value. However, that does not mean the "number" is valid. Mathematical calculations are essential, but all valuation approaches must also be filtered through real world market and deal making experience.
Since a valuation (even the very finest) is still only an opinion, it makes sense to have that opinion rendered by a valuator that can utilize a full range of accepted valuation approaches and who can also address marketability, likely deal structure and market perceptions. For example, we have seen many businesses that "on paper" looked like they had substantial value, but which in fact had fundamental flaws that dramatically degraded what the market would actually pay. Unfortunately, in some cases the businesses that looked fine on paper were, from a market perspective, essentially unsellable. Only an experienced mergers and acquisitions specialist with years of hard knocks buying and selling in the marketplace can provide a grounded answer to the central question every entrepreneur will ask, "Do you think my business can actually be sold at this value?"
At CrossPointe we've been valuing and selling middle market businesses for 20 years. For us, value is not a theoretical concept, it's an essential piece of the business planning, exit planning and estate planning process; and it deserves the utmost rigor.
To discuss a "real world," versus an academic valuation of your business please contact us.