Fri 10th January 2014
It is important to remember that the true value of a business is where the balance is struck between what a buyer will pay for it versus what a seller is prepared to sell it for.
The value of any one business will be different for each buyer and the type of buyer they are. With IT support and telecoms businesses, the majority of buyers will be trade / strategic buyers (See Edition #2, Who would buy your ICT business), and so the strategic value to them will lie in the opportunities to cross-sell services between the combined client base, the acquisition of new expertise and the synergy savings that can be achieved through combing the overheads.
Competition between buyers for your business is also a key driver of value and this is where using a broker to market the business for sale and manage the negotiations is an important factor in achieving the best value.
Deal structure will also play a role in the headline value obtained. Accepting a portion of the deal as a deferred payment, earn out arrangement, or retaining a share of the company, will in most cases increase the deal value. We will look at deal structures more closely in future editions.
Whatever their strategic interest is, prospective buyers will use various valuation methods to determine their offer. The commonly used valuation techniques for IT support and telecoms businesses are:
- Multiple of Earnings Value, and
- Multiple of Turnover Value
We will look at each of these methods in detail, including a look at the typical multiples used, in the next two editions.
Would you like us to assess the value of your IT support and telecoms business?
We would be delighted to offer you a free appraisal of your business to give you guidance on its value and attractiveness to buyers, and whether now is the right time for you to sell. Our appraisal can take the form of either a face-to-face meeting or a telephone call, as you prefer.
Please contact us on 020 8090 9380, email [email protected], or complete the form below to arrange an appropriate time to review your exit strategy and the value of your business in confidence and without obligation.