Valuations for private online business
How much your business is worth?
It’s
all about the money. How much you get. How much you pay. The value of your company or a company you want to buy or invest
in is based on both current performance and future value.
After working for a long time with early
stage companies in the software and online industries identifying revenue channels, creating high-growth strategies and tactics,
and raising money, I know how to value companies at this awkward stage.
I know how tight money is
at this stage, so I chose to do the two valuation levels that meet the needs of most early stage companies and priced my valuations
fairly. Choose the one that fits your situation. I won’t go half-way then up sell you on the rest.
If
you want to sell your business, raise money, or hire an expert or consultant to work for equity rather than cash, you better
know what you company is worth. By the same token, if you are that expert or consultant considering working for equity rather
than cash, you need to know the value of your client company.
Internet based companies are hot items.
There is a growing demand for internet businesses that can show their value. In any market buyers, investors, and lenders
place a value on the business, and the entrepreneur is often left in the dark about where that valuation came from. Often,
the price offered for a company is based on the least that the buyer thinks the seller will accept.
To
get to a point where you can talk with confidence about the value of your business you need more than a dollar figure pulled
out of the air. Cheap out of the box valuations detract from your business package rather than enhance it. A solid valuation
of your business that you can discuss and defend is essential to getting a fair market price for your business. My valuation
of your closely held business provides you with a solid point of negotiation for successful completion of your transaction.
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The Situation A growing software company required a valuation
for prospective investors and buyers. Both historical financial information and projections that included new products and
market niches had to be included. Company records were not perfect but mostly good bookkeeping and accounting records were
available.
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The SolutionHolt Capital examined the facts of the company using the
company's records, market assessment, and valuation of intellectual property. Using multiple valuation approaches proved
that the best method for setting the value was a discounted cash-flow model. The valuation not only provided a starting point
for discussions with prospective investors, it allowed the entrepreneurs to clearly state the company’s value to investors
and buyers. The valuation also established value for minority shareholders, answsering one of the investors' objections.
The value of the company was far more than management and investors had realized, and provided them with a new vision about
their company and its future.
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