When the GB Olympic Relay Team heads out onto the track, they have practiced the race many, many times. Those of you as old as me remember some of the embarrassments of the 80s when we had some of the best sprinters in the world, but kept on dropping the baton. These days, British relay runners are far better prepared.
Running a business is like a relay race – at some point, after you’ve run your leg, you pass the baton to someone else. Whether through a sale, merger, family or management succession, you pass the baton.
When talking to business owners about the value of their shareholding, we are often asked “what’s the formula to value my business?” In fact, there are various formulae in common use for valuing a business based on the three main approaches that can be taken.
There are a number of business valuation methods available suited to different purposes, circumstances and types of business. It is often advisable to value a business by multiple methods to get a thorough understanding of the value of a business and the assumptions made to derive the different figures.