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Services >
Consulting > Business Valuation
Factors
Effecting Valuation
While business valuations are very subjective, there are 16 key
factors to take into consideration when valuing a business.
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Annual Sales and Profit Trends – What are
they for the last 3 years?
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Lease Terms & Conditions – What are they?
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Marketing – What stage is the business in
– infancy or maturity? How long has the present owner owned it? What
is the primary source of sales? How is the company positioned? What
are the marketing/sales programs?
-
Presentation – Is the business
presentable (clean, organized)? What is the condition of
environment?
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Business Hours – What is the number of days
and hours of operation?
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Type of Products/Services – Are the
products/services proprietary or commodities? Are they diverse? What
are their advantages?
-
Type of Business – Is it a franchise or
an existing business?
-
Systems –What are the systems in place
for accounting, employee management, software/hardware and
sales/marketing?
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Financial Outlook – What is the asset
base (high or low)? Are there records that reflect profit/sales
trends? Is revenue sustainable? What are the growth and expansion
opportunities? What is owed and what is coming in (debts, credits
and receivables)?
-
Marketplace - Who are the competitors?
What are the barriers? How does the industry landscape look? What is
the geography/location of the business?
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Management & Employees – Is the business
managed by the owner or hired help?
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Customers – What are the # of customers
and their contribution to revenue?
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Suppliers – What are the # of vendors,
their contribution to the business and how much does the business
depend upon them?
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Relationships/Uninterrupted business –
Can customer, supplier and employee relationships withstand a change
in ownership?
-
Legal Issues – Are there
any lawsuits, environmental issues or pending regulatory changes?
-
Terms & Stock – Will the
purchaser buy or the seller sell? Does it require a low or high
down payment?
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