Quote from Lawson Willett on July 8, 2025, 9:08 am

Guide to Valuing a Business and Maximising Its Worth

1. Understand Core Valuation Methods

Before diving into external influences, get clear on the primary ways businesses are valued:

A. EBITDA-Based Valuation
- EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) helps gauge operating profitability.
- Common approach:
Enterprise Value = EBITDA × Industry Multiple
Multiples vary by sector, market conditions, and growth potential.

B. Seller’s Discretionary Earnings (SDE)
- Often used for smaller businesses.
- Adjusts profits to reflect the owner's compensation and discretionary expenses.
- Formula:
SDE = Net Profit + Owner’s Salary + Non-recurring Expenses

C. Asset-Based Valuation
- Relevant for asset-heavy businesses.
- Value = Total Tangible Assets – Liabilities

D. Discounted Cash Flow (DCF)
- Ideal for businesses with stable, predictable cash flows.
- Projects future earnings and discounts them to present value.

 

2. Adjust for Economic Conditions

Valuation is heavily influenced by macroeconomic dynamics:

- Interest Rates: High rates shrink cash flow projections and valuation multiples.
- Inflation: Impacts operational costs and consumer behavior.
- Currency Stability: Especially important for export-heavy businesses.
- Supply Chain Volatility: Affects fulfilment reliability and customer satisfaction.

During downturns, emphasise operational resilience and cost control.
In growth phases, spotlight scalability and market expansion potential.

3. Factor in Social & Market Trends

Investors and buyers look beyond numbers:

- Consumer Behaviour: Is demand shifting toward convenience, sustainability, or personalisation?
- Remote Work & Virtual Infrastructure: Businesses offering flexibility (e.g., virtual offices) may carry premium value.
- Brand Reputation & Online Presence: A strong digital footprint directly boosts perceived value.
- Tech Adoption: Automation, AI integration, and digital platforms contribute to scalable value.
- Regulatory Changes & ESG Compliance: Future-proofing around the environment, governance, and diversity often sways investors.

Tip: Align your brand story with prevailing trends to increase buyer confidence.

4. Strategic Factors to Boost Business Value

Here’s where your strategic and creative strengths shine:

Key Areas and How to Enhance Value

Client Base | Diversify and secure long-term contracts 
Marketing Strategy | Use infographics, and stylised case studies to show ROI 
Operational Efficiency | Optimise logistics (e.g., contract packing clarity)
Recurring Revenue | Add subscription models or service retainers
Visual Storytelling | Use clear, engaging communication tools to show impact
Documentation & Processes | Standardise and systematise processes for easy transfer

Make your business look turnkey and scalable.

5. Timing & Presentation

- Sell at the right time: Peak performance + positive trends = premium offers.
- Professional Valuation: Get expert input using industry data and comparative analysis.
- Pitch Deck: Present your business like you would to an investor. Include financials, growth roadmap, and case studies.