What Is My Business Worth?
How will the Market Value my Business?
With Deal Pipe, thinking about the Valuation of a Business is a multi-prong approach.
To begin with, the value range that we peg your company to before we go to market is based on our experience in the industry and having sold thousands of companies before yours. But what goes into the valuation1. With Deal Pipe, thinking about the Valuation of a Business is a multi-prong approach. process?
While we have a highly proprietary method of valuing our clients’ companies, here are 10 things that we look for in every deal:
- What will the demand be for this business?
- If there are any truly comparable sales of similar businesses, then what multiples did they achieve?
- Does the business have strong KPIs, like: recurring revenue, high net profit, strong lifetime value of a customer, low customer acquisition cost, concentration ratios, customer base (e.g., the US government vs a consumer), subscription revenue, churn rate, contract value, and roughly 150 other KPIs that we take into account when valuing a business.
- Are we seeing a lot of buyer demand for these particular types of companies.
- What is the EBITDA level of the company?
- Is the company one that can be financed?
- Are there any legal or other issues with the company that creates a risk profile?
- Is the company in growth mode, stable or dropping?
- Is the owner willing to retain equity and/or remain with the company for a period of time after closing (beyond just a transition period).
- What is the age of the business
We don’t value businesses from a book or from a piece of software that spits out what a company should be worth. A company is a living, breathing thing … it is as unique as each of our fingerprints and is more than just some information you can look up in a database. Plus, the broker you choose can make a massive difference in the valuation you achieve at market. Only through professionalism, expertise and the ability to drive demand do you get to the levels of success that we see.
How does Deal Pipe create opportunities that Impacts your Company’s Valuation?
Teamwork
Our brokers work as teams, much like a law firm. Our firm’s principals stay involved throughout the process to guarantee our clients the highest levels of experience, competence, and professionalism. Nobody works alone at Deal Pipe. Our brokers work together to build buyer networks to bring buyers to deals that matches the buyers’ mandates. Our principals oversee everything, ensuring that when an issue pops up, experience is there to tamp it down before a fire breaks out. Most transactions have issues before they close, but with a team of people with a combined experience of over 125 years is there to deal with it, the issue can be dealt with seamlessly.
Coaching
We aren’t just transactional in nature. As prior business owners ourselves, we understand the pressure and stress that comes with selling a business. We help the business owners prepare the business for a potential sale and provide invaluable coaching to ensure that the exit strategy is sound and timed right.
That includes identifying opportunities for value-increasing improvements, the creation of financial models to match market valuation, and ensuring that financials and forward projections are clean and ready for market scrutiny.
In addition, we prepare owners for buyer/seller calls, LOI negotiations, the due diligence process, and helping them to locate other professionals within our network to help along the way (e.g., accountants, tax advisors, attorneys, etc.).
Some clients we coach for many quarters until they are ready to sell. We don’t charge anything for these invaluable services – we are 100% performance based, which means that all of the work we do through the months or even years to prepare the business for an ultimate sale is free of charge – our only fee is due when we actually close a business.
