How do I calculate the price I could sell one of my...

How do I calculate the price I could sell one of my businesses/branches for?

SHARE

In the case of a car sales business you would need to look at the value of the stock on your dealer floor as well as the financial performance of the business.

Typically you would look at the profit that you have generated, as well as the profit that you have budgeted to earn in future years and adjust this by a risk factor that would represent competitors in the market place, the pressure that the consumer is under and any other variable that could put the performance of your branch under pressure.

The most common valuation techniques are a discounted cash flow, which essentially take the net cash that will be generated by the business and converting it to a present value using the discount factor I addressed above, or you can take the Net Asset Value of your business, which would essentially be your assets less your liabilities, or a combination of both.

Valuations are very subjective and the key would always be to support how you get to the value based on real, grounded numbers that can be justified and accepted by a potential acquirer.

Andrew Bahlmann
Andrew Bahlmann is quickly becoming recognised as a CORPRENEUR™ that is successfully increasing his clients’ ‘Profit per Minute’. With a background in sales, marketing and finance, he introduces his clients to new and innovative ways to sustainably extract more out of their businesses and people. Andrew’s experience consists of running his own destination management business to looking after the sales and marketing balance sheet of R114 billion at WesBank as that portfolio’s CFO. He is also the founder of www.smetradezone.com. Visit www.intelstrat.net, or email andrew@intelstrat.net