Instructions estimating business value – advanced

Instructions for estimating business value – advanced mode

Below follows a brief step by step guide on how to estimate business value with our online forms. This method gives a more exact value of your business in comparison to the simple business valuation form. If this version is to complicated for you, and you do not have the data or the knowledge of financial terms needed, we recommend the simple version instead. If you have comments or need help with the valuation, you can post a comment below or below the simple valuation form.

General rules

  • First of all, do not use commas, use dots. For example 15.3 is how you write “fifteen point three”.
  • Secondly, fill all available text fields, otherwise the calculation might not work the way it is intended.
  • And remember, this is a valuation tool based on your inputs and our formulas. To get an exact valuation of your company, you might have to hire a business valuation consultant. This form gives you an indicative value of your company.
  • LTM = Last Twelve months
  • FY = Fiscal Year

Valuation inputs

  1. Type in the sales of your business. If you have numbers for your LTM, use those numbers. If you only have numbers for the last fiscal year, use those instead. But remember what you use for the rest of the valuation. The numbers has to be comparable. If you have extraordinary sales during your LTM, adjust that number to better represent a “normal year”. Make estimates for the coming five years. Be reasonable – it is not likely that your sales will increase with 100% every year.
  2. Type in the EBITDA margin (Earnings Before Interest Taxes Depreciation and Amortisation) you had during your LTM or last fiscal year, depending on what you used when you estimated your sales. Estimate your future EBITDA margins for the coming five years.
  3. Type in the depreciation your company filed. Let this number represent a normal year, so if you had extraordinary depreciation, either to small or too much, adjust so that it represent a “normal” year.
  4. Type in the CAPEX (Capital Expenditures, funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment) for the LTM. Let this number represent a “normal year”, you might need to adjust it if it was extraordinary during your choosen period.
  5. Type in the current assets had during  the period. Adjust for extraordinary posts.
  6. Type in the short-term debt had during  the period. Adjust for extraordinary posts.
  7. Type in the net debt had during  the period. Adjust for extraordinary posts.
  8. What size has your company? This will affect the risk premium. Smaller companies tend to be more riskful and will decrease company value.
  9. Choose your industry. Try to choose a industry as close as possible to your’s. This link might be a little helpful to determine industry.

Now press the estimate value button!

If you want to know how we calculate the value of your business, you can follow this link on determining a business value.

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