Checklist For Company Valuation


Are you considering selling your business? If you are in the process of evaluating your company for sale then this checklist might be helpful, it's a list of things you need to consider when looking at your company valuation:

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Knowing how to value your business is not essential, but an understanding of what buyers will look at and how that impacts value is important. Many business owners assume the value of their company is based on revenue.

In fact, cash flow and EBITDA (earnings before interest, taxes, depreciation and amortization) are the primary metrics for determining value.

But it's not all financial. Buyers also look for things like scalable infrastructure, IP and R&D, strong management team, customer concentration, and capacity for growth.

Recommended reading: Tips on Positioning Your Business for Sale

Here is a checklist for valuation for your company: 

  • Synergy with buyer
  • Your financial ratios
  • Earning streams
  • Net cash flow
  • Quality and basis of the forecasts
  • Risks
  • Customer lists
  • Intellectual property
  • Patents
  • License and distributorship agreements
  • Regulatory approvals, leasehold interests
  • Employment contracts
  • Press coverage
  • Internal controls
  • Internal reporting structure
  • Ability to obtain any financing or reasonably priced financing
  • Product, industry, and geographic diversification possibilities
  • Ability to expand into new markets
  • Management expertise
  • Sensitivity to macro- and microeconomic movements.
  • Dividend history
  • Sensitivity to business risks, supply squeezes, and demand lulls
  • Ability to control or influence regulatory and union activity
  • Economies of scale or cost disadvantages
  • Access to distribution channels
  • Relationships with suppliers and customers.
  • Product differentiation or brand name recognition

 Over to you now. Have you gone about getting a valuation for your business? Any tips to share? Tell us in the comments below. 

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