We work with middle-market business owners every day and almost every owner we talk to asks this question, “How much is my company worth?”
Some believe they know what their company is worth, because they have paid to have a valuation done. Others have “heard” that a company similar to theirs sold for “X.” Therefore theirs should be worth at least “2X.” Still others have done their own evaluation and firmly believe they know exactly what their company is worth.
In short– valuations are not that simple. Every company is different, and while an outside valuation provides a snapshot of value at a specific time, that value can change significantly if you lose a major customer, the market crashes, the owner dies, or other potential changes occur after the valuation.
Actually, the market determines the value of your company. If you are thinking of selling all or part of your company, you must effectively market your company to the largest number of qualified buyers. In this auction-styled process, the market will determine the value of your company, and it is often more than a standard valuation. Currently the market is delivering excellent values for well-managed, profitable companies!
So– how much is your company worth? It is worth whatever someone is willing to pay for it today!