Where it starts
Value only means something next to what you actually want.
Every engagement opens with what the owner is trying to do. Grow the business. Take more income out of it. Depend on it less. Make it durable. Hand it to someone. Sell it. Some combination, on some timeline.
That is not a soft question asked to be polite. The same change can be right for one objective and wrong for another. Maximising distributions now can remove the capacity growth would have needed. Investing in sale readiness is essential for an owner leaving in three years and largely wasted on one who intends to hold indefinitely.
So we establish the objective before valuing any of the options. Everything after that is measured against it, which is why two businesses with the same problem can get different advice from us.
How it is measured
Two numbers, multiplied together.
Enterprise value is not mysterious. Almost everything written about it is detail attached to one of these two numbers.
Maintainable earnings
What the business reliably earns, once you strip out one-offs, owner benefits, and anything that will not repeat under new ownership. This is usually lower than the headline profit, and the difference is worth knowing before someone else points it out.
The multiple
What a buyer will pay for each dollar of those earnings. Set partly by your sector and the market, and partly by how much risk is attached to your specific business. The second part is the part you can change.
Improving a business means moving one of these two, usually both. Work that moves neither may still be worth doing, but not for this reason.
What moves it
Three things move the earnings. Six move the multiple.
These are the drivers that come up most often in owner-led businesses. Which side a thing sits on decides how you go after it.
What moves the earnings
What the business reliably makes, before anyone applies a multiple to it.
Growth, and whether it is holding
The base a buyer starts from, and their read on what happens next. A business earning the same amount three years running is valued differently to one that has grown each year, even when this year's number is identical.
Margin quality
Whether margin holds at unit level or only in aggregate. Margin that depends on one product, one contract or a pricing position that has never been tested is worth less than margin that is structurally sound.
Whether revenue turns into cash
Profit on paper and money in the account are not the same thing. Revenue that takes ninety days to collect, work billed in arrears, stock or work in progress sitting on the balance sheet: each one means the business is funding its own growth. Buyers look closely at how much working capital the business needs to run, because they have to fund it too.
What moves the multiple
How much risk a buyer sees in those earnings continuing without you.
Customer concentration
One customer at a third of revenue means a single decision by someone outside your business can reprice it. Buyers price that risk, and they price it harder than most owners expect.
Owner dependency
A buyer is purchasing future earnings without you in the business. Whatever lives in your head, your relationships and your approvals does not transfer, and the gap is either discounted or handled through an earn-out that keeps you there.
How predictable the revenue is
Contracted revenue, repeat revenue and one-off revenue are not valued the same way. Two businesses with identical turnover can sit a long way apart on this alone.
Regulatory standing
Where the business runs on a licence, registration or accreditation, that standing is part of what is being bought. A clean history is worth money. An unresolved finding, a condition on the licence, or a regulator who has been in recently will be found in diligence and it will be priced. In some sectors it stops a sale outright.
Whether the operation holds up
Delivery that depends on particular people working long hours. Quality that slips when volume rises. One supplier you could not replace quickly, one system nobody else understands, an incident record nobody has looked at properly. Buyers are working out whether the business still performs once the effort currently holding it together changes hands.
Whether the business can answer the second question
Buyers who cannot get clean information move slower and bid lower. Reporting that cannot break performance down when asked reads as risk, whether or not there is anything underneath it.
What we can tell you
A number you can interrogate.
An indicative valuation range
Built from your maintainable earnings and comparable transaction multiples, with the basis and the assumptions written down so you can argue with them.
The gap against what you want
You tell us what the business needs to be worth, and by when. We show you the distance between that and where it sits now.
What each driver is costing
Which of the things above are holding the number down in your business specifically, and roughly what closing each one could be worth.
An exit readiness report
Where a sale or succession is in view: a graded read on how ready the business actually is, what a buyer would find, and what would move the grade.
What this is not
An indication is not a valuation opinion.
We are not registered valuers, and an indicative range is not a substitute for a formal valuation where you need one for tax, litigation, a dispute or a transaction. When that is what you need, we will say so and you should get one.
What we produce is a working range, drawn from comparable transactions rather than from an offer on your business. Multiples move. Two businesses with identical earnings sell for different numbers, for reasons that are not always visible in advance.
What we can say with more confidence is the direction and the rough size of the effect of changing something. That is usually the more useful question anyway, because it is the one you can act on.
Clearer priorities. Stronger execution. Better performance.
A Commercial Assessment gives you the read on where value is being created, where it is being held back, and what closing each gap could be worth.
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