Factors Impacting Valuation

Valuation is a major issue in selling your business.

Here are some key factors impacting the price:

The size of the company buying your business — the bigger the company, the higher the potential price.

Demand for your company — the more buyers in the mix, the higher the valuation.

Form of payment — taking stock will typically generate a higher selling price.

Earnouts — the use of earnouts can increase the valuation.

Competitive advantages — the more advantages your business has, the higher the price.

Current economy — the stronger the current economy and market, the higher the price.

Target use of the company — the higher the value of the combined company, the higher the buying price.

Past valuations — the higher the valuation from previous funding rounds often results in a higher buying price.

Relationships — the stronger the relationship with the buying team, the higher the price in some cases.

Consider these factors in preparing your business to sell. 

 

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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.