Exit Plan Valuation of Business

Exit Plan: Valuation of Business

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A key aspect of an exit strategy is business valuation. Business Valuation is an estimate of your company’s current asking price, or of the financial value of your stake in the organization. It’s a number that tells you how much you could expect to make if you put your ownership in the company on the market right now. How much is your company worth? How much will it be worth when you exit? To find out how to get the answers to these questions, read on:

Getting a Valuation

A Valuation can be done by a valuation specialist. This is a person who will determine the value of your business and can estimate what you can realistically expect to see from a sale. Basically, your goal is to maximize your payout by leaving the company when value is high, and a valuation will tell you whether it’s truly time to leave, or if you need to continue building. It’s so important to find the right valuation specialist—someone experienced and trustworthy, and to discard any assumptions you have about your business that are not fact.

Ways to maximise your company’s valuation

Here are a few factors to think over that could help you boost your companies value:

Timing – It’s critical to get a valuation only when you and your business are ready. Going through the procedure too soon is a waste of time and money because it won’t tell you anything about what to expect when it’s time to leave, due to the market being ever-changing.

Taxes – The tax consequences of an exit can be devastating if you don’t plan ahead. Work with a financial expert now to minimize your tax liability and ensure a profitable exit when you eventually leave.

Cash Flow – Cash flow is the lifeblood of your business. It not only ensures your organization’s survival but demonstrates good health to a valuation specialist, buyer, investor, or another external appraiser.

Lockdown your key value drivers – Whether it’s your people, technology, intellectual property, contracts, customer base, or a combination thereof—or something else entirely—protect it and nurture it until you’ve completed your exit.