What's Your Company Worth?

I am routinely asked by business owners and entrepreneurs about the value of their company. The question generally comes on the heels of various scenarios ranging from the business owner or entrepreneur has either been approached by a financial or strategic buyer wishing to buy the business or the ownership is considering several factors that may affect valuation of a business today versus waiting and driving further valuation inflections. Putting aside the various methodologies used to value a business (recently published Forbes article that I authored), the bottom line is that the real value of your business is what a buyer is willing to pay for it, i.e., what the market will bear. One cannot solely rely on the methodologies and math alone. Models do not account for buyers convictions about what they can do with the business.

The real value of your business is what a buyer is willing to pay for it.

So what will drive the selling price? Buyers look to "post-acquisition economics" or what can the purchase of the business generate for the buyers in the future on their base business as either a tuck-in on another portfolio company or as a standalone entity. Real valuation of a business is driven by a buyer’s willingness to pay more than others for the opportunity. This dynamic creates a large variability in valuation, negotiation tactics and opportunity (or risk) for you. And for this reason, you want to be talking to more than just one potential buyer to not only drives sales price but increase the probability of completing a transaction.

So how can you be sure what your business is worth? The key takeaway for me is you need to take it to market based on your personal and professional objectives given the market dynamics and timing. If you are trying to either explore a business sale, a valuation of your company and / or assets, or are interested in exploring opportunities for growing value in your business, we are happy to assist you with your goals. Contact me at (858) 461-9490 or reply directly to [email protected]. Let's have a discussion on what's right for you.

Take your business to market based on your personal and professional objectives given the market dynamics and timing

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Disclosure

Objective Capital Partners is a leading investment banking advisory firm whose Principals have collectively engaged in more than 500 successful transactions serving the transaction needs of growth stage and mid-size companies. The executive team has a unique combination of investment banking, private equity, and business ownership experience that enables Objective Capital Partners to provide large enterprise caliber investment banking services to companies with annual revenues up to $500MM. Services include sale transactions, partnering/ licensing, equity and debt capital raises, valuation and comprehensive advisory services. The firm uses a proprietary process to work to achieve maximum company valuation, premium pricing, and high client satisfaction rates post-sale. The firm’s industry expertise is focused on 5 verticals including healthcare, life sciences, business services, technology, and consumer products. Additional information on Objective Capital Partners is available at www.objectivecp.com.

This article is provided for informational purposes only and does not constitute an offer, invitation or recommendation to buy, sell, subscribe for or issue any securities. Securities and investment banking services are offered through BA Securities, LLC Member FINRA, SIPC. Objective Capital Partners and BA Securities are separate and unaffiliated entities. While the information provided herein is believed to be accurate and reliable, Objective Capital Partners and BA Securities, LLC makes no representations or warranties, expressed or implied, as to the accuracy or completeness of such information. All information contained herein is preliminary, limited and subject to completion, correction or amendment. It should not be construed as investment, legal, or tax advice and may not be reproduced or distributed to any person.