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How do you value a privately owned business? A guide provided by R A Valuation Services Ltd, Specialist UK Business Valuers.

R A Valuation Services Limited specialises in providing formal company valuation and business valuation reports. Our expertise, together with an extensive database of comparable information, means that we are able to apply one or more appropriate methodologies to accurately value any sector type, and size, of business or company.

There are four main approaches to valuing a business in the UK - earnings multiple, net asset value, discounted cash flow and relative valuation based on industry specific analysis.

In many cases for small trading businesses, an earnings multiple provides the most accurate market comparison. The earnings multiple - based on a number of open market transaction values of closely comparable businesses - is applied to a precisely calculated level of sustainable ongoing annual profit (signifying a level of maintainable annual trade) that the business is likely to achieve over the course of a typical payback period.

The net asset value assesses the business' assets (e.g. buildings, machines, equipment, stock and any relevant intangibles such as brand and IP) to equate the value of the business. However, whilst possibly appropriate for some property and manufacturing businesses, the net asset value may reflect the lowest value a trading company is likely to achieve.

A cash flow analysis - using the discounted cash flow (DCF) method - can be included to value a business if future cash flows are relatively predictable. The discounted cash flow method takes a business’ future net cash flows and applies a rate of discount to reflect the time value of money, and the level of risk associated with the business, to bring the cash flow to a present day value. Although more typically used for investment into larger organisations or significant asset acquisition, a DCF approach is often applied or included in valuations for growth share and freezer share issues.

In some sectors, especially where there are high volumes of business sale transactions, certain industry rules of thumb become established that can be applied within a relative valuation methodology.

An accurate and independent assessment of the value of a business is an essential tool in any form of business change or development. Our thorough and detailed approach ensures valuations are accurate and realistic in the marketplace. Our valuation reports are vital in aiding business owners, purchasers, financial and legal advisers, or any other party with a prospective interest in the business' value.

We are happy to explain the process and what you would need to provide in detail. Please phone the office on 01425 402 402 for more information.

PROFESSIONAL BUSINESS VALUATIONS

Business Valuers UK

REASONS FOR A VALUATION

An expert business valuation supported by a professionally prepared Valuation Report from an independent and authoritative source is an essential aid for:

  • Acquisition and divestment negotiations
  • Management buy-out and management buy-in
  • Business sale and business purchase
  • Director, shareholder, partner change
  • Restructuring
  • Matrimonial / divorce settlements
  • Dispute resolution
  • Litigation
  • Tax planning (e.g. EMI schemes), tax agreements and tax disputes
  • Incorporation
  • Borrowing and funding
  • Business development
  • Strategic planning
  • Performance benchmarking and indicators
Business Valuers UK

RECOGNISED AUTHORITY

Valuation Reports produced by R A Valuation Services Ltd are bespoke and geared to each client’s individual circumstances and requirements; they are definitive and realistic in the market place. As we are recognised as expert witnesses for supplying Valuation Reports to UK courts and HMRC queries/challenges, we are acknowledged to be the authoritative business valuer by:

  • HMRC including:
  • Shares and Assets Valuations (SAV)
  • Valuation Office Agency (VOA)
  • UK Courts
  • Banks
  • Other lenders and financial intermediaries
  • Tax specialists
  • Accountants

R A Valuation Services' Valuation Reports are tailor-made for their purposes, definitive and realistic in the market place. Indeed, such is their authority that an R A Valuation Services' Valuation Report is normally insisted upon in support of negotiations.