What is a business valuation — and why bother?
A valuation determines what your company is financially worth, based on earnings, assets, market position and future potential. It matters whenever real money moves: selling, buying, raising capital, securing loans, estate planning, mergers and legal proceedings. Without one, you leave money on the table or make costly mistakes in negotiation.
How is it calculated?
Four main methods: capitalisation of profit (adjusted net profit against a cap rate), market comparisons with similar recent sales, asset-based valuation of tangible and intangible assets, and discounted cash flow based on projected earnings. What moves the number: revenue and profitability, market position, growth potential, key-person dependency, and intellectual property.
The biggest mistake owners make? Assuming they know their worth without an expert assessment. Overpricing scares buyers; undervaluing costs you real money.
Can’t I just do it myself?
You can estimate — but professional valuations deliver unbiased, data-driven insight that prevents expensive errors, for sellers and buyers alike. And because values shift with the economy, the market and your own numbers, regular valuations keep you ready for the decisions that matter.
