For sellers and buyers alike, business valuation is an important process. It accurately determines the value of a company so that the owner can make informed decisions about how to proceed with overseeing it.
Many factors go into valuating a business, and these are three of the biggest factors we consider during our business valuation process:
- Financial history. How has your business performed over the course of your ownership? Financial history contributes significantly to the valuation process because it provides necessary background information into what a new buyer should expect to work with in the event that they buy the business. This information can also help make informed predictions about the future of the business’s growth.
- Industry trends. Business trends can look different for different industries. For example, tech companies are considered stable due to modern reliance on technology, so it’s likely that a tech business would be valued highly. Industry trends can fluctuate depending on many different factors, but our expertise, market knowledge, and brokerage experience make us well qualified to speak on the trends related to your small business’s industry.
- Company age. Younger companies can be more of a gamble to business buyers because there hasn’t been as much time to evaluate how successful the business has the potential to be in the area. Older companies with a longstanding reputation and history are generally viewed as safer investments, which can help increase value. The age of your company often plays a role in determining other business valuation factors, including the financial history and its relation to potential profitability.
At Carolina Investment Brokers, we’re local small business experts who are experienced in business valuation for both selling and buying businesses. If you need business valuation to move forward with any important decisions, reach out to our team today.