Business Valuation

Business Valuation Services for Exit Planning

Business valuation services put a defensible figure on what a company is worth at a given moment, based on its earnings, its assets, the risks a buyer would inherit and what comparable businesses in its market change hands for.

 

A valuation prepared by accountants is a reasoned opinion supported by evidence, not a rule of thumb applied to last year's profit. Owners commission one when planning an exit, moving shares, resolving a dispute or raising finance, or simply to understand whether the business is on course.

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Our 5 Stage Success Journey

The full process, from compliance and foundations through to exit planning, and what each stage actually delivers. Exit planning is stage five, and it works because of everything underneath it.

  • 01 Compliance and Foundations
  • 02 Tech Advisory
  • 03 Business Advisory
  • 04 Tax Advisory
  • 05 Exit Planning
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What business valuation services are for

A valuation is almost never idle curiosity. It is attached to a decision: whether to accept an offer, how to price shares moving to family or a management team, or how much growth is needed before selling makes financial sense.

That decision shapes the valuation itself. A figure prepared for a trade sale is not constructed the same way as one prepared for a tax position or a shareholder dispute. The purpose sets the basis of value, and the basis of value changes the answer. Establishing it is the first thing a valuer does and the first thing an automated tool skips.

 

When do you need a business valuation?

Exit planning. You want to know whether a sale would deliver what you need, and what has to change if it would not. This is when a valuation is most useful, because there is still time to act on it. Our exit planning services cover the wider process.

Share transactions. Bringing in a shareholder, buying one out or issuing shares to key staff requires a figure both sides can stand behind, and the tax consequences usually depend on it. Our tax advisory team works alongside the valuation.

Succession. Passing a business to family or to managers needs a figure that is fair to everyone involved, including those not receiving shares.

Disputes. Shareholder disagreements, partnership breakups and matrimonial matters turn on what the business is worth and on who prepared the figure.

Raising finance. Lenders and investors want to understand the value of what they are lending against.

 

Why a business valuation accountant reaches a different figure

An online calculator applies an average multiple to a profit figure you type in. It knows nothing about how your revenue is contracted, how dependent the business is on you, or how a buyer would view your customers. It produces a number, not a valuation.

A broker's appraisal is usually a marketing document produced by a firm that would like to sell your business. The incentive behind it is not neutral, and it rarely shows its workings.

A business valuation accountant starts from the accounts and works outward, adjusting reported profit for anything that would not continue under new ownership and testing whether earnings are durable rather than accepting the most recent year. The resulting figure can be explained line by line to a buyer, a lender or an adviser acting against you, which matters more than it being flattering.

 

Why two businesses with the same profit are not worth the same

This is where valuation stops being arithmetic. A buyer is not purchasing last year's profit. They are purchasing the likelihood of that profit continuing without you.

What separates two otherwise identical companies is structural. How much revenue is contracted or recurring rather than won again each year. How concentrated the customer base is. Whether the business runs when the owner is absent. The quality of the records and how quickly due diligence can verify them. Whether growth is genuine or the result of one unusually good year.

These factors are also the ones you can influence, which is the argument for valuing a business well before you intend to sell. Our business advisory service works on them, and our business growth calculator shows how improvements in the underlying drivers change the picture.

 

What the work involves and what you end up with

We establish what the valuation is for, then review statutory accounts, management information, contracts and the commercial position of the business, adjusting reported earnings to reflect what a new owner would inherit.

From there the method matters. Earnings based multiples, discounted cash flow, asset based approaches, market comparables and entry cost each answer a slightly different question. Choosing between them, and deciding how much weight to give each where more than one applies, is where judgement does the work. It is also where valuations most often go wrong when attempted without experience.

You receive a written valuation setting out the figure or range, the basis on which it was prepared, the assumptions behind it and the factors most likely to move it. We then talk it through, because what the number means is more useful than the number.

What an independent business valuation means in practice

An independent business valuation is prepared by an adviser with no financial interest in the outcome. We are not selling your business, we take no commission on a sale, and our fee does not vary with the figure we arrive at. The valuation is neither inflated to win a mandate nor suppressed to serve one side of a transaction.

That matters most where more than one party will rely on the figure. A number both sides can interrogate is worth more than one commissioned to support a position already taken.

 

What to look for in business valuation experts

Judge business valuation experts on things you can verify. Ask whether they will show their workings and defend their assumptions under challenge. Ask whether they have experience of businesses of your type and size, and whether the same people will still be available when the figure is questioned.

Pulse works with businesses across a broad range of sectors from offices in Newton Aycliffe, Newcastle upon Tyne and London and we provide company valuation services UK wide. Where a matter calls for a formal expert report or a specialist outside our scope, we will say so and help you find the right person.

 

Who this is for

Owners of limited companies, partnerships and established sole trader businesses who need a figure they can rely on. Some are approaching a single exit worked toward for years. Others build and sell repeatedly and want valuation built into how they operate.

If you are working out whether the business is ready to sell, our Exit Readiness Scorecard is a useful place to start before commissioning a valuation.

 

Talk to a business valuation accountant

The work varies with the purpose, the structure and the state of the records, so the first step is a conversation about what you need the figure for.

 

 







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How do I get started?

You do not need to know when you are selling. You do not need to have decided how. You only need to know whether the business you have built would stand up to a buyer's scrutiny today, and what it would take to make sure it does.

That is a conversation, not a commitment. Take the scorecard, or speak to one of our exit planning accountants and find out which stage of the journey you are actually at.

  • Business valuation services are a professional assessment of what a business is worth, prepared by accountants or valuers using financial performance, assets, risk and market evidence. The work involves adjusting reported earnings to reflect what a new owner would inherit, assessing the risks attached to them, and applying a method suited to the purpose.
  • Because a valuation carried out well before a sale tells you whether your plans are realistic while there is still time to change the outcome. It identifies the gap between what the business is worth now and what you need it to be worth, and what is holding the figure down.
  • A broker's appraisal is typically a marketing estimate produced by a firm that hopes to sell your business, whereas an independent valuation comes from an adviser with no stake in whether a sale happens. The difference shows up in the evidence supplied and in whether the figure survives scrutiny from a buyer's advisers.
  • Online calculators give a rough indication at best, because they apply an average multiple to a profit figure without knowing anything about the business behind it. They cannot assess owner dependence, customer concentration or the quality of contracted revenue, the factors that separate two businesses reporting the same profit.
  • Not necessarily. A valuation establishes a defensible view of value on a stated basis, while a sale price is the outcome of a negotiation influenced by how many buyers are interested and how the deal is structured. A sound valuation gives you the evidence to negotiate from and tells you when an offer is worth taking seriously.
  • Statutory accounts and management accounts for recent trading periods, details of assets and liabilities, information on customers and contracts, and staffing and management structure. We also need to understand what the valuation is for, because the purpose determines the basis on which it is prepared.
  • No valuation can be guaranteed to be accepted by a third party, and any adviser promising otherwise should be treated with caution. What a properly prepared valuation gives you is a figure supported by evidence, with the assumptions and method stated openly, which puts you in a position to defend it.
  • Yes. Partnerships, limited liability partnerships and established sole trader businesses can all be valued, although the approach differs because the value of an unincorporated business is often more closely tied to the owner. Part of the work is assessing how much of it would survive a change of ownership.
  • It depends on the purpose and on the state of your records. A valuation prepared from clean management accounts and a clear set of contracts moves quickly. One where the records need reconstructing before any assessment can begin takes considerably longer, and that work has to happen first because a valuation is only as reliable as the information behind it. The purpose matters too, since a figure prepared for a negotiation is not held to the same evidential standard as one that may be examined by a third party. We give an indication of timescale once we understand what the valuation is for and what condition the records are in.
  • Not always, but you are in a considerably weaker position without one. An owner who has never had the business valued has no independent view of what it is worth, which means the first credible figure they hear tends to become the anchor for everything that follows, and that figure usually comes from the buyer. A valuation prepared in advance tells you whether an approach is worth pursuing, what the offer is missing, and which parts of the business are being under-priced. It also tells you when to walk away, which is harder to do without evidence.