How much is your business worth? How much should you pay for a business? These are not easy to answer questions that depend on a number of factors. However there are guidelines and it is important to understand the methods that others may be using when making these judgements.
The Institute of Chartered Accountants have produced 3 briefing documents that are a helpful start:
- Valuing a business.
The uses of valuation, key factors affecting the value of your business, standard methods of valuation, and how to calculate profit for the purpose of valuation. - Buying a business.
How to complete the purchase of a target business, including checking what state the business is really in. - Selling a business.
Grooming the business for sale, the sale process and negotiation tips.
An article on how to sell your business, which is also useful looking at if buying a business, can be found here: Selling your business.
These articles are helpful for establishing an understanding, but do remember that buying or selling a business is an important step that requires professional advice.
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