Business appraisal is necessary not only for the implementation of purchase and sale transactions or the calculation of the collateral value, but also in order to determine the effectiveness of management decisions. The main criterion for their selection is very often the possibility of increasing the cost of the organization.
Instructions
Step 1
For a qualitative assessment of the value of a business, it is necessary to assess the entrepreneurial income, that is, the amount that the owner of the enterprise earns every month after the payment of wages to employees and taxes. In addition to the company's profits, entrepreneurial income may include the owner's salary, which he receives as CEO, as well as the remuneration of other family members who work in the firm.
Step 2
Next, you need to find out whether the company operates on rented or on its own premises. If a business uses a lease, Russian investors consider it normal if the company's price is equal to 7-18 months' income. In some cases, for a number of reasons in the acquisition of a particular business, investors are willing to pay an amount equal to the profit for the last 24-30 months. The profitability requirements for businesses that are offered alongside owned real estate are usually not so high. A cost equal to the total income for a period of two to five years is considered acceptable.
Step 3
When determining the real value of a business, use another important criterion - the quantitative ratio of organizations proposed for sale to potential buyers. Over the past years, companies in the service sector, food business, and public catering have been in great demand.
Step 4
Next, you need to assess how high-tech the organization is. Firms are sold quite expensively, and you do not need to have specialized training to manage them. Thus, most investors regard car washes as companies whose development does not require costly and original marketing strategies, so buyers are willing to pay about 30 times the monthly profit for such an enterprise.
Step 5
Consider all possible risks. The lack of dark sides in the deal justifies the higher cost for some buyers. Companies with completely transparent accounting will have a high price, even if they do not have very high profits.
Step 6
Do not forget to evaluate the assets of the enterprise. In the presence of expensive and high-tech equipment, as well as real estate in the property, the liquidation value of these objects must be added to the value of the cash flow.
Step 7
When determining the value of a business, take into account trained staff and a stable client base of the company. The business reputation of the company is also important.
