Factors Affecting a Business Valuation

The only sure thing about business valuations is that they are not a precise science!

An incomplete list of just some of the factors that can influence the valuation of a business:

Business history Business reputation Market share Potential for growth Industry conditions Superiority Vulnerability Political and economic outlook Cash flow Management / staff competency Reliance / non-reliance on founder Production capacity Ability to increase revenues Cost competitiveness Business’s use of technology Ability to reduce costs Comparable businesses Prevailing legal issues

Potential to improve customer relationships Ability to borrow against business or assets Performance results and ratios Location Presentation of premises Existing relationships with suppliers and customers Intellectual property Intangibles including relationships and contacts Goodwill Condition of books and records Computerisation Tax implications Alternative opportunities Affordability Working conditions (hours and days) Property lease conditions and landlord Comparable industries