The Basic Mechanics Of A Business Valuation
Your Business|June/July 2021
There is a wide range of reasons why you may need to attach a value to your business.
Gareth Watson
The Basic Mechanics Of A Business Valuation

While a simple web search for “how to value a business” will produce plenty of methodologies, approaches, tips and “rules of thumb”, the bad news is that only some of these will be appropriate to value your business.

Understanding the basic elements to a business valuation exercise can put you in a better position to assess proposals for your business, and for potential future transactions where its value is involved.

Common elements to all valuations

Generally speaking, business valuations aim to place a fair value on a business. Just like there are many different types of businesses, there are many different valuations methodologies and approaches. However, they all share some common elements and underlying principles.

Cash is king. A valuable business is one that demonstrates healthy, reliable cash generative ability. This is often referred to as Free Cash Flow (“FCF”) and is broadly a measure of the cash that is available to investors in the business. FCF is itself quite a broad topic, but the common thread is consistency: businesses that generate consistent cash flows tend to attract higher valuations than those that don’t.

The past does inform the future…to some extent.

Denne historien er fra June/July 2021-utgaven av Your Business.

Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.

Denne historien er fra June/July 2021-utgaven av Your Business.

Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.

FLERE HISTORIER FRA YOUR BUSINESSSe alt
61% of South African SMMEs Planning For Growth
Your Business

61% of South African SMMEs Planning For Growth

Mastercard SME Index

time-read
2 mins  |
August/September 2021
Your Business

Selecting A Collections Partner

Key considerations and insights...

time-read
3 mins  |
August/September 2021
Recipe For Success
Your Business

Recipe For Success

Key ingredients for a successful partnership between e-tailers and their software developers.

time-read
3 mins  |
August/September 2021
Our Success. Your Success.
Your Business

Our Success. Your Success.

The need for business training to improve bottom-line results in businesses across the country has never been greater.

time-read
6 mins  |
August/September 2021
How Small Businesses Improve Revenues In Tough Times
Your Business

How Small Businesses Improve Revenues In Tough Times

While many small businesses were able to adapt to lockdown in the short term, new challenges emerged when it came to returning to physical workplaces. Modern workforces, for example, are fragmented, while exposures, health and safety concerns frequently disrupt operations. How do we cope with these and many other related difficulties?

time-read
2 mins  |
August/September 2021
Making An Impact
Your Business

Making An Impact

Every year in August we take the time to celebrate women and reflect on the tremendous efforts they make to shape our society.

time-read
8 mins  |
August/September 2021
The Hidden Value Of Outsourced IT Resources
Your Business

The Hidden Value Of Outsourced IT Resources

The IT needs of today's businesses are constantly evolving, making outsourcing a very attractive option that can offer a number of compelling benefits for businesses, small or large.

time-read
4 mins  |
August/September 2021
Networking At Virtual Events
Your Business

Networking At Virtual Events

Just because you can't shake hands and pass around business cards, doesn't mean you can't network at a digital event.

time-read
5 mins  |
August/September 2021
7 Questions To Ask A Prospective Digital Media Partner
Your Business

7 Questions To Ask A Prospective Digital Media Partner

If you are looking to outsource your digital marketing function to an agency, here are some question to ask before signing on the dotted line.

time-read
4 mins  |
August/September 2021
Riches And Beyond
Your Business

Riches And Beyond

Empowering the next generation of entrepreneurs

time-read
6 mins  |
June/July 2021