Company Valuations
Business valuation is a process and set of procedures that are used to estimate the economic value of an owner’s interest in a business. It can provide either a point-in-time assessment of value or indicate the price a willing buyer might be prepared to pay to acquire a business in the future. Valuations are performed for a myriad of reasons, including but certainly not limited to selling or acquiring a business.
The appraisal of value however is somewhat of an art form and not an exact science. Each party involved in a transaction whether a private individual, trade buyer, venture investor, accountant or lending institution will generally have different approaches, objectives, interests, experience and information available to them. Because of this results can differ wildly with values ranging from the sublime to the ridiculous in relation to marine businesses!
This is generally because of the lack of sector understanding, experience and insight of practitioners coupled with an absence of a consistently applied methodology and comparable deal data. Without access to specific ‘business type’ methodologies (for example the valuation method for boat dealerships) and comprehensive transaction data, it is simply not possible to obtain sound advice and a likely value range achievable.
Valuation is a major aspect to our professional work and First Peninsula Marine is a standard setter in this area.
We have worked hard to create industry valuation standards (which have proved overtime to be a reliable guide with a +90% average accuracy rate) that overcome the challenges involved in building trust and reliability in marine business appraisals, ensuring owners can have confidence in results.
Backed by our proprietary marine specific ‘value matrix’ which enables price adjustments to be made after normalising trading accounts and our market leading ‘comparables index’ (a database of marine transactions of all types and sizes of deals), we are able to accurately calculate enterprise value and source market multiples for both asset based (on and off-balance sheet) and profit based valuations.
We consistently apply, benchmark and review these standards to every marine business by type, size, profile and location. By doing this we can also provide comment on market sentiment and provide values based on tangible evidence of what investors are paying as well as demand. For example, some businesses coming to the market will already have a long list of potential buyers seeking such an opportunity, which needs to be factored into pricing strategy.
Investment in an informed and accurate business appraisal, obtaining expert advice, having realistic and achievable expectations and agreeing campaign strategy all helps to de-risk a transaction.
Our industry leading business appraisal service is carried out sensitively and confidentially and offers a proven framework designed to help an owner maximise value, achieve a competitive edge in the market and obtain advice and support in preparing a business for sale. We help owners understand what their marine business is worth (likely value achievable), what supports and drives that value, how marketable it might be, what demand there might be and what the profile of buyer will most likely be.
So, before worrying about marketing, negotiation, deal dynamics and transaction management, obtaining an objective appraisal valuation as part of overall exit planning and preparing a business for sale is critical to a successful outcome.
Please contact the office for further information:
Telephone 0333 987 3122 or email office@firstpeninsula.co.uk
NB: A word of caution! Having heard the horror stories and witnessed the damage for ourselves, owners may want to take note of the risks inherent in trusting the ‘free on the spot valuation’ approach taken by general business transfer agents, consultancies and online calculators. We have seen values quoted for marine businesses (without detailed and meaningful work taking place) that are baseless and over inflated, prices are simply derived at as a precursor (in an attempt) to seduce an owner into paying marketing, contract or advisory fees.
Even if one were to trust their valuation, these companies also do not have access to the efficient marine business sale marketplace developed and established by First Peninsula Marine. We work with more private and trade buyers targeting the sector and sell more marine businesses on a day-to-day basis than any other advisory practice, agency or platform.