How a business is valued for investment or sale

How a business is valued for investment or sale

If you’re looking to raise equity capital, join us for the 3rd in our 4-part webinar series examining everything beyond your pitch deck

Business valuation, also known as company valuation, is the process of assessing the total economic value of a business and its assets. During this process, all aspects of a business are evaluated to determine the current worth of an organisation be that for the purpose of investment or sale.

Those of you already on your capital raise journey will be familiar with the process, which is often described as both a science and an art. You will also know that there are several different methods deployed to value a business (see below), but that the majority apply to companies who have been trading for some time and so are not suitable for pre-trading or early trading organisations.

Methods of business valuation:

  • Multiples of earnings
  • Earnings Before Interest, Tax, Depreciation & Amortisation (EBITDA)
  • Net Asset basis valuation
  • Entry Cost
  • Discounted Cash Flow
  • Industry Rules of Thumb

The valuation you achieve for your business has a direct correlation to the equity you give in exchange for the capital you receive; therefore, it is essential that you get this right!

Business valuation is always an area that we advocate you outsource to a specialist or firm experienced in this area, often an accountancy practice. A home-baked valuation is unlikely to be given credibility by investors and will not withstand their scrutiny and due diligence. However, even when seeking the support of a third party to value your business, it is helpful to understand the framework and methods behind the process. To this end, we are delighted to welcome Sean Hackemann of Specialist Accounting Solutions (SAS) to help us better understand this complex but paramountly important practice.

Who is this webinar series for?

This webinar series has been specifically designed to meet the needs of businesses looking for equity investment, be that from a venture capital firm or business angel. We have essentially invited local specialists and investors to co-host these sessions which will consist of approx. 30 mins presentation and 30 mins Q&A.

You may or may not have already attended OxLEP’s other investment-related events i.e. Investor Pitching Fast Track, Pitch to the Panel, or Scale up and Investment Power Hours. Where ever you are on your investment journey, we welcome you and urge you to register for all 4 webinars in order to gain optimum insight and value.

Remaining webinars in the series

This webinar is part of a ‘Raising Equity Capital’ series, dates/times of remaining webinars are as follows:

  • Wednesday 22nd March – 12.00-13.00: SEIS/EIS approval explained

For more information about the eScalate programme, visit: www.oxfordshirelep.com/escalate

Please note that these 1:1 sessions are part-funded by the European Regional Development Fund (ERDF) and are delivered as part of the eScalate programme to help SMEs. By engaging in this programme you are being offered assistance under the De Minimis regulation which allows a company to receive up to but not exceeding €200,000 of public funding (at the applicable exchange rate) of De Minimis aid over a rolling three-tax year fiscal period. This de minimis declaration does not cover undertakings engaged in: the primary production of agricultural goods and fisheries/aquaculture, road freight, services of general economic interest and export related activities and activities favouring domestic over imported goods. Please note, support cannot be given to undertakings (businesses) in difficulty. In order to receive support from this programme, you will be required to complete an application form and other relevant documentation.