Once a year - for management analysis

One of the wise noted that it is not the one who moves faster who will most likely reach the goal, but the one who moves in the right direction. Before answering the question of how to evaluate a business, it is necessary to understand why the evaluation is carried out.

In general, value assessment is carried out in two situations - when making a transaction (this can be a purchase and sale, pledge, merger and acquisition transaction, etc.) or when accepting management decision. In the first case, as a rule, it is necessary to involve a professional appraiser who, on the one hand, acts as an independent arbiter for the parties to the transaction, and on the other, has the necessary methodological tools for a comprehensive assessment. In the second case we're talking about about the value, which serves as a guide for business owners and top managers. This cost can be calculated by the entrepreneur independently. This is the assessment that will be discussed in the article.

The goal of any business activity is to make a profit. Net profit ultimately goes either to pay dividends to owners or to increase the company's capitalization. The capitalization of public, quoted companies is quite easy to find out. For example, Gazprom has 23.6 billion shares, which are quoted at the day of writing at around 152 rubles per share. Thus, Gazprom’s capitalization is 3.6 trillion. rubles It's simple. The answer to the question of how much the “shares” of a cafe, service station, or laundry cost is more complicated, but much more important for the owner of a small business.

There is no universal formula into which, by substituting a couple of numbers, the owner will receive the exact value of his business. Imagine that a business is a child: this one is stronger, this one is smarter, this one is quicker. Who will say that an A in math is more important than an A in physical education? Can there be a single method for determining the value of a car manufacturing business, an IT company and travel agency? Apparently not.

Business valuation is based on the use of three main approaches: cost, comparative and income. Each of these approaches reflects different sides of the company being valued, namely: the seller's side, the buyer's side and the market. Within the framework of this article, only one method of the comparative approach is considered. To determine the price of a transaction, this is not enough, but to conduct management analysis, at least once a year is quite enough.

But first, it is necessary to establish some limitations and assumptions.

First of all, formulas are formulas. Valuation formulas apply to a business that has a market value or, in other words, can be sold. However, in practice, a small business that generates income and effectively uses assets cannot always be sold for a number of reasons. For example, the income of the business being valued may depend on the unique abilities of the owner (no one needs a souvenir business if the owner is the only virtuoso craftsman). Or in some cases, it is not profitable for the buyer to acquire an existing business for settlement price, since it can be opened quite easily from scratch.

Secondly, the assessment is “as is”. A business, like a living organism, can be in different states. It can be healthy, or it can be very sick. It’s one thing to evaluate an existing, only converted enterprise with a streamlined production cycle, and another thing to evaluate an enterprise with bailiffs on the doorstep. The article deals with the assessment of a business in an “as is” state, i.e. subject to the constancy of the main factors that shape this business.

Thirdly, no one knows a business owner better, not even the tax office. Therefore, calculating the value of a business should be based on real numbers and facts, and not on financial statements.

Components of business value

Determining the value of a small business based on simple multipliers

The formula for calculating the value of a small business is:

V B = V RA +V TZ +(V DZ -V KZ)+V DS +V NI,

V B - business value

V RA - settlement assets

V TK - inventory

V DZ - accounts receivable

V KZ - accounts payable

V DS - cash on the account and at the cash register

V NI - market value of real estate.

It is better to analyze the formula starting from the last term.

As a rule, a small business is built on rented premises, so the VNI indicator is 0. If the business is built on its own premises, then their cost is simply added. The value of real estate can be easily determined by contacting a real estate agency.

It is quite possible that the organization being assessed has a certain amount of cash on hand, in a current account or in bank deposits. Their sum is the value of V DC.

As a rule, no business can exist without debt. At the same time, the company may have both its own debts (accounts payable) and the company may also owe it (accounts receivable). Their difference is the value V DZ -V SC.

Some types of small businesses require a significant amount of inventory. Their cost should also be added to the cost of business V TK.

And finally, the main indicator of V RA, which determines the cost of an entrepreneur’s labor in organizing sales, setting up business processes, hiring personnel, etc., is the cost of estimated assets. The basis for their calculation, as a rule, is average monthly revenue or annual net profit. By multiplying the corresponding indicator, we obtain the last term of the formula.

For example, a cafe located on its own premises (150 sq. m) in the Zasviyazhsky district of the city of Ulyanovsk is assessed (4.5 million rubles). The average monthly revenue of the cafe over the last six months is 0.4 million rubles. The company's revenue increased by 5% over the six months. A circle has formed regular customers, which bring at least 30% of revenue. The company has an outstanding loan in the amount of 1 million rubles. As of the valuation date, the cafe purchased food and alcohol worth 0.3 million rubles. There are funds in the account in the amount of 0.2 million rubles.

The cost of such a business will be from 5.2 million to 6.8 million rubles

At the same time, taking into account the positive dynamics of revenue, as well as the presence of regular customers, the most likely cost of the business is approaching the average value.

Since the method under consideration offers the owner a range of price multipliers, he will inevitably face the problem of choosing the most objective value applicable to a particular company. To resolve this issue, it is advisable to consider the most significant factors on which the market value depends:

1. Quality of amenities offered by the company being assessed

2. Dynamics cash flows generated by business

3. State of the company's inventory

4. Level of competition

5. Possibility of creating a similar business

6. Regional trends in economic development

7. State of the industry and prospects for its development

8. Rental conditions

9. Location

10. Phase life cycle business

11. Pricing policy

12. Product quality

13. Reputation

As you can see, evaluating your business is quite a feasible task.

If you have any questions, please contact [email protected].

For many Belarusian owners, the issue of business valuation causes difficulties. Financial analyst"Zubr Capital" Viktor Denisevich talks about the most practical valuation method and gives a formula for calculating the value of a company.

Estimating the value of a company is like playing chess. A chess player who plays white and one who plays black may evaluate the position on the board differently. Likewise, an owner and an investor are likely to have different views of the same company.

Obviously, this happens because the owner and the investor have different goals. From the owner - to sell the company or part of it for the highest possible price, from the investor - to buy a share or the entire company for the lowest possible amount.

When it comes to estimating a company's value, there are an almost endless number of ways to determine it. But the most practical and adequate in this matter is comparative method.

Its essence is that you form an assessment not only based on the company’s internal resources, but, first of all, based on information about the value of peer companies.

Let’s say we have a fictitious company “A”, which produces shoes in Poland. Let's look at her example to see how the company's value is assessed.

If you want to know the value of your company, then first of all you should start with a benchmark. That is, select analogue companies and analyze their cost. Of course, the availability of this information depends, first of all, on the development of the stock market and the openness of the M&A market in the region.

The first difficulty you will encounter is the almost complete lack of information about similar companies on the basis of which you can base an assessment in our country. How to solve this problem?

There are two verified sources of information:

• data from public companies around the world
• information on M&A transactions not only in Belarus, but also abroad

As a result, you will receive an array of data on different companies, regions, etc. Now the task is to select the correct analogue companies on the basis of which you will make your assessment. To do this you need:

1. Identify a wide sample of companies based on general criteria that characterize your company (industry, region, revenue volume, products or services).

Let's look at our company "A". Using data on public businesses, we will compile a list of companies involved in the production of footwear in Europe. Here are 11 companies that, in their main characteristics, are similar to ours.

2. The next step is to narrow down this list using niche criteria. This includes market share, level of competition, management team, growth potential, financial performance, etc.

In our example, we will adjust the sample based on financial indicators. Companies with revenues from $30 million to$ 150 million. So, we have 5 companies (highlighted in dark). Revenue data is in millions of dollars.

The next step is to choose a multiplier based on which we will evaluate our company.

Historically, there have been 3 types of multipliers:

• interval(determines the value of a company based on the results of its activities and is the most common, for example EV/EBITDA)
• moment(value is determined based on the company's performance at the reporting date, for example, from the statement of financial position)
• industry(for each industry there are specific multipliers, for example, the number of wells for an oil producing company)

Let's say that as a result you have a sample of 5 analogue companies, and each of them has its own multiplier value. Next goal- based on the data obtained, determine the value of the multiplier for your company. To do this you need:

1. Cut off extreme and/or unrepresentative values ​​of multiples of peer companies.

After looking at more detailed data, we found that the multiple for Fenghua SoleTech AG is not representative.

2. “Weigh” intermediate results

Having analyzed the remaining companies, we came to the conclusion that based on region, strategy, market share, financial indicators, we should use the following weights to calculate the multiplier.

As a result, we received that the multiplier for our company “A” is 6.296.

3. Make final adjustments(for example, discounts by region).

We must understand what fundamental dependencies influence the formation of the multiplier.

This dependence is expressed by a formula that, at first glance, seems terribly complex.

EV/EBITDA = f(G,Ke,MARG,T) = f(G,BETA,DUM,MARG,T)

Essentially, this formula answers the fundamental question: “What determines the value of your company?”

It depends on:

• the marginality of your business, that is, net profit margin (abbreviation “MARG”)
• from the country in which your company operates (indicated by the abbreviation “DUM”)
• from the industry you work in (in our formula this is “BETA”)
• on the tax rate that falls on your company (“T” in our formula)
• the company’s growth potential in the coming years (we use it as a variable “G”)
• cost equity company (usually denoted by the symbol "Ke")

Thus, the value of the company is influenced not only internal factors(amount of equity capital, profitability, etc.), but also external ones - for example, the so-called “country risks”.

Each country poses certain risks for the investor.

In the same way, industry risk is determined, which also affects the company's valuation.

Let's calculate the adjustments for our company "A". Initially, our multiplier was determined at 6.296. Let's look at the risks: we can exclude some risks and variables, for example, country risk, because Our comparison included almost all companies from Poland.

If we assume that the profitability of our company is slightly lower than the industry average in Poland, then we need to take into account the profitability discount. In addition, company A does not have audited financial statements international standards. In this connection, we need to make a discount to our estimated multiplier.

As a result, our company will be worth 5.91 EBITDA.

Thus, using the example of company “A” as an example, we see that value depends on many variables and contexts that are important to consider.

You can see how much different estimates for the same company can differ using the “Transaction” simulator.

Overall, valuing a company is as exciting as playing chess.

Victor Denisevich

Engaged in market analysis, financial due diligence, preparation of analytical data for the board of directors, and actively participates in the development of financial models of strategies.

In 2013 received ACCA certificate (dipIFR). Currently undergoing CFA training.

Buying an existing business in St. Petersburg is a complex and time-consuming process. One of the key steps is the assessment of a ready-made business. Correctly determining the value of a business is important for both the buyer and the seller.

Problems of pricing in the ready-made business market

The seller of a ready-made business most often inflates the price, because he perceives the object as a child in whom he has invested his strength and money. Businessmen selling ready business in St. Petersburg, sometimes they even get offended when the buyer tries to reduce the price. Therefore, an entrepreneur who decides to buy a ready-made business in St. Petersburg must also make an assessment so as not to overpay for the property.

Valuation of a ready-made business - a tool for forming an adequate price

Professional brokers of the Altera Invest company explain that by playing with price in the market for a ready-made business, you can change a lot. There is always a chance to buy or sell a business at an inflated or undervalued price.

The task of a professional broker is to ensure that both the seller and the buyer win in the end. Both can remain in the black if the business is assessed correctly.

Assessment methods

According to experts, there are several approaches to evaluating an existing business:

Cost-effective approach. In order to give a correct assessment, you need to calculate what costs you would incur if you decided to create a business from scratch: how much money you would spend on renovating the premises, purchasing equipment and consumables, recruiting personnel. This also includes months of “downtime”, for which you will also need to pay rent.

For example, according to a business plan, the total amount reaches 3 million rubles, while the owner offers you to buy a beauty salon for 5 million rubles. Here you can safely point out to the business seller that it is more profitable for you to organize your business yourself than to acquire his business.

This is a good method, however, professional business brokers at Altera Invest note that this type of assessment does not take into account the intangible value of the company. That is, reputation, brand, various know-how, accumulated customer base etc.

Comparative approach. Don't forget that no two businesses are alike. This is due to the fact that even if one ready-made business is located on the main street, and another is 50 meters away from it, but around the corner, naturally, the level of income will be different. Accordingly, the cost of the finished business will be different.

That is why, among business buyers, the income method of valuing an existing business is most often used. After all, having bought a business, they want to recoup it in the shortest possible time. This kind of approach is best applied to a business that generates good profits.

Mixed method. It is a combination of the two above. This way you can get the most objective picture. Only professionals who have been working in the market for many years can give a competent and reliable assessment of a ready-made business.

The market for selling ready-made businesses in Russia is growing year by year. More and more people want to invest money, even small ones, in a real business, to try themselves as an entrepreneur. And often the acquisition of an existing company turns out to be the best option achieving these goals. But only if you approach the issue thoughtfully and thoroughly.

The slightest resistance from the seller in providing information is a danger signal!

When purchasing a ready-made business, regardless of its specifics, you can use the following algorithm of actions.

Begin entrepreneurial activity(as well as expanding an existing one) can be done in two ways: create new business or buy ready-made. Having assessed the pros and cons of the second option, you can decide whether it is suitable, or whether it is better to use the first option.

Advantages of a ready-made business:

• The history of development, good or bad, which makes it possible to evaluate it.
• Availability of premises and equipment.
• Fully staffed.
• Well-established connections and sales channels.
• A finished product (service), sometimes an already well-known brand.
• A certain demand for goods (services), the ability to predict its change.
• Detailed financial and accounting reports.

Disadvantages of a ready-made business:

• The equipment may be worn out and technological processes- outdated.
• The lease may not be renewed.
• The staff may be poorly qualified
• Counterparties may be unreliable; relations with them may have been damaged by the previous owner.
• Subsequently, debt obligations (unpaid taxes, penalties and customs duties or warranty statements).

STEP 2. Select the type of business to purchase

To do this, you need to answer several questions:

1. Is there any type of activity or business that you have dreamed of?

2. Which type of business best matches your knowledge, skills and past experience?

3. What do you want to do: production, wholesale, retail or services?

4. Are you interested in business related to import-export?

4. Do you want to involve your family in working in a ready-made business?

Experts recommend first making a choice between production, retail, wholesale and services, then resolving the issue of import-export, and then determining a specific product (service) or market within the chosen sector.

STEP 3. Decide on funds

First of all, decide how much of your own funds you can allocate to complete the transaction. Then decide how much money you can and are willing to borrow (for example, from a bank).

Note: the possibility of raising borrowed funds to acquire a business depends on the availability of liquid fixed assets and real estate. If you are acquiring a business that owns such assets, then in most cases 50% of the total value of the business or investment project you can take out a loan. Your personal assets can also serve as collateral for a loan to purchase a new business.

STEP 4. Select options that suit the cost

Entrepreneurs who want to sell their business place advertisements in newspapers free ads or in the local line ad department periodicals, in any business publications or newsletters, on specialized Internet sites. Another source of offers are broker companies specializing in the sale of ready-made businesses.

Note: Sellers do not always publicly announce the sale of their business. The reason is that strict confidentiality must be maintained, since the announcement of a sale may cause unrest among customers, employees and suppliers. And many potential sellers choose to use personal networks to find buyers.

Therefore, it is also necessary to make inquiries among friends, acquaintances, entrepreneurs, lawyers, bank employees, accountants, consultants and colleagues. You can also interview suppliers or distributors in the business you are interested in.

STEP 5. Find out the reasons for selling the selected companies

The previous owner may have several of them:

• Changing of the living place. Lack of possibility of direct control and management of the process.
• Disagreements between owners. No joint agreement has been reached on ways to further develop the company.
• Loss of interest in business. After 6-8 years, the activity may simply cease to be satisfying.
• Illness, reaching advanced age. The owner's ability to manage the business is limited, and there are no worthy successors to the business.
• The need for investment in another project. The owner found a more profitable and less burdensome line of business.
• Sale of non-core assets. Some areas of activity large enterprises or holdings are less profitable or do not fit into the overall development concept.

In principle, all reasons can be grouped as follows:

• this business has ceased to generate sufficient profit (the industry is experiencing a decline and decline business activity; the company is under threat of bankruptcy; weak management; the company is involved in criminal scams, etc.);
• the owner intends to engage in some other business or diversify his activities; intends to retire for personal reasons; he does not have enough funds to develop the company.

It is clear that buying a company is advisable only when the owner of the company is guided by considerations included in the second group.

In principle, at this stage, out of all the previously selected options, two or three suitable ones remain.

In conditions Russian market It is not yet possible to estimate the value of a company based on the market value of its shares, since only shares of large enterprises are quoted on the open stock market. Therefore, when assessing small and medium-sized businesses, experts recommend using the following approaches: profitable, market and cost.

Income approach

With this approach, the value of the company is determined by the amount of expected income. This method assumes that the buyer will not pay more for the business than the present value of future earnings for the period of interest. Using this approach, the buyer calculates various options for business development. However, with this approach, the level of risk is often determined too subjectively. This method valuations are good if the company's earnings are positive and stable.

Market approach

The value of a business is estimated by comparing the recent sales of companies of comparable size. The main condition for applying this approach is a mature market. The value of the company being valued (V1) is determined as the product of the ratio of the market price of the analogue company (V2) and its basic indicator (R2) by the basic indicator (R1) of the company being valued: V1=V2/R2×R1. The basic indicators are usually: net profit, book value of the enterprise. When choosing comparable companies, they are guided by the following requirements: the industry of the enterprises must match, quantitative and quality characteristics the companies should be approximately equal.

Cost-effective approach

The cost of a business is determined by the amount of resources spent on its reproduction or replacement, taking into account physical and moral wear and tear. This approach is most effective when the buyer is looking to compare the costs of acquiring a business with the costs of starting a similar business.

There is no clear answer as to which assessment method to use. In each case, approaches are combined depending on the specifics of the business.

Note: At this step, it makes sense to contact independent consultants, business brokers or professional appraisers. They often play a vital role. After all, determining the value of a business is a process that requires professional knowledge and experience in various fields of law, mathematical analysis, economics, accounting and audit.

At this stage, as a rule, there is only one suitable option left.

STEP 7. Study the selected business in detail

If funds allow (and the game is worth the candle!), it is best to turn to professionals again and order Legal Due Diligence - a comprehensive check of the seller for “due diligence”. At a minimum, it will make it possible to clarify the reliability of the legal and financial information presented, check the correctness of the documents and their compliance with current legislation. As a maximum, “due diligence” includes conducting a legal and financial audit of accounting and tax accounting, assessing the suitability of top managers for their positions, conducting an inventory of property, etc. to infinity.

If there are not many doubts, and the transaction amount is not so large, you can try to do the above procedure yourself: ask as many questions as possible, demand reporting, inquire about the numbers and models of equipment and the dates of their purchase, make inquiries about business reputation, find out about all the obligations of the acquired company, etc.

Note: the slightest resistance from the seller in providing the information you are interested in is a danger signal!

There are also serious reasons for concern:

1. Shortened strict time frames for selling a business.

2. Key information on the object is missing.

3. Obtaining even existing information is difficult.

4. There is no clear reason for the sale or justification; the reasons for the sale are not credible.

5. It was discovered that the seller distorted or incorrectly interpreted at least part of the information about the property.

STEP 8. Minimize possible risks

1. Investigate anything that could potentially harm your business.

2. Find out the condition of the property complex and the features of its location. This will prevent problems, for example, due to the termination of a lease agreement.

3. You need to rely on facts and, if possible, not take your word for it, no matter how trustworthy the seller may be. This is especially true for the volume of profit and turnover of the company declared by the seller.

4. Offer to conclude a guarantee agreement on the absence of debts that do not go through the accounting department. It is signed by all founders and the CEO. The buyer's legal protection is that once the warranty deed is signed, they are personally liable for any borrowings by the company during the last three years. In case of negative consequences the buyer has the opportunity to send creditors to their real debtor, or, if the case goes to court, to file a recourse claim to protect their rights.

5. Lawyers also recommend drawing up detailed plan transfer of managerial powers. This is especially important for maintaining relationships with customers, suppliers, partners in other operations and employees of the acquired enterprise. After all, it is important for the buyer to maintain a viable business.

6. The agreement with the seller must indicate that the new owner acquires only those debts related to the activities of the enterprise that are specified in the agreement. And debts associated with the previous activities of the enterprise do not pass to the new owner. The agreement and its annexes must contain a detailed list of all debts included in the enterprise, indicating the creditors, the nature, size and timing of their claims.

STEP 9. Start negotiations to purchase

If all your doubts are resolved in positive side, make a formal offer and move on to negotiations.

Note: Sellers prefer not to deal with unserious buyers, so don't be surprised if you are asked to put down a deposit, similar to what is done in real estate transactions.

As a rule, in negotiations, both parties start with maximum and minimum offers and gradually soften their terms. Therefore, you must determine in advance the price and terms on which you agree to purchase the business. Naturally, start with more favorable conditions for yourself. Be prepared for the seller to meet your first offer with terms that you consider unfair. This is an inevitable part of bargaining. If your intentions are serious, work towards terms you agree to accept.

STEP 10. Buy a business!

Reference

Market for the sale of ready-made businesses: results of 2006

(www.1nz.ru/readarticle.php?article_id=1278)

The most popular and offered, as usual, are cafes and small restaurants in the price range of $50-150 thousand; hairdressers, beauty salons ($25-50 thousand); car services ($100-250 thousand).

Among travel agencies, offers of 10-20 thousand dollars prevail, for which the demand is, as a rule, very insignificant. Worthy offers can be considered travel companies, possessing not only a travel agent, but also a tour operator license, having their own representatives abroad and agreements with hotels and inns. But the price of such a company will already be from $30 thousand and above.

There have been certain preferences in acquiring businesses related to the provision of intangible services: consulting, auditing companies, educational institutions. Investors are ready to invest up to $150 thousand in such companies that have existed for more than 5-7 years and have all the necessary licenses and permits. Such types of businesses as modeling and concert agencies began to be offered. More offers have appeared for the sale of advertising and advertising production companies.

In the field of medicine and pharmacology, there is an excess supply of medical centers and dental clinics and, on the contrary, demand for pharmacies and pharmacy kiosks, exceeding proposals.

In retail trade, there is a significant excess of supply over demand. This is typical for small shops and pavilions in shopping centers costing 30-180 thousand $.

Among manufacturing enterprises factories for the production of bricks, blocks, and tiles are popular. The buyer can pay up to $1 million for such a business, but he must be sure that all old connections and customers will be preserved. At the same time, the demand for such type of business as the production of PVC windows and doors is decreasing. There are offers for food production (sausage, confectionery shops) costing $400-700 thousand, but the demand for them is small.

Articles

How to evaluate an existing business?

A few seditious thoughts

I am sure that professional appraisers will not like this article. Many of them may even want to crucify me upside down on a cross for seditious thoughts about the appraisal business. The fact is that the role of this sphere, its place in modern economy, especially in small and medium-sized businesses, are often exaggerated, redundant, and practical conclusions are controversial.

What is the market valuation of a business? This is determining the value at which it can be sold and how much profit it will generate in the future. Professional appraisers have at their disposal several basic valuation methods, the content of which is widely covered in the literature on valuation and is enshrined in valuation legislation.

In Russia, three methods are used: the “income approach”, “ cost-effective approach" and the "comparative approach". All these methods are complex, require special training, and for an ordinary entrepreneur, whose motto is “act and earn money!”, They will seem unnecessarily complex and have very distant relation.

Maybe appraisers are right with their calculations when it comes to large enterprises and multinational corporations?

Alas, not always. Otherwise it would stock market, trading stocks and others securities They would simply die or never experience the colossal fluctuations that we periodically observe. After all, colossal amounts of money circulate in stock markets, especially in countries with developed and rapidly developing economies. Investment funds that manage companies, before purchasing shares or bonds of certain companies, actually conduct a thorough assessment of the value of enterprises, rightly expecting a certain level of dividends or capital gains.
If the business valuation methods were correct, then the movement of funds on the stock markets would be insignificant, since everyone had a fairly accurate idea of ​​how much they could get by investing in a particular company. In fact, the stock market is very unstable and subject to significant fluctuations, sometimes contrary to obvious logic and methods for calculating business valuation.

Take the last stock crisis, for example. The greatest losses suffered in China - since the beginning of this year, the total index of shares of Chinese enterprises has decreased by 20 percent. At the same time, China's GDP growth in 2007 was 11.4 percent; the forecast for 2008 is approximately the same. So where to short term Has a fifth of China's potential evaporated? It turns out that professional appraisers adjusted their forecasts so quickly, making a mistake of trillions of dollars?

What do I care, an ordinary businessman will say, about China’s GDP, investment funds, valuation methods and other lofty matters? And he will be right. No one else can better assess the potential and value of his business. Indeed, in most cases, only an entrepreneur thoroughly knows all the weak and strengths of your business, as well as the limit of its development. In order to evaluate a business yourself, it is enough to know a few basic points and follow common sense.

Disadvantages of Individuals

The sale of an existing business serves as a kind of moment of truth for an entrepreneur. The point is not so much how you developed it, but the fact that by the time of sale, due to ignorance of certain legal issues, its value may turn out to be much less than you imagined. This is especially influenced by the choice of organizational and legal form of doing business.

Many Russians, when starting their own business, register as individual entrepreneurs. Yes, this form has many advantages: ease of registration, lower penalties, optional stamping and opening a current account, etc.

But there are also disadvantages, one of which is directly related to the topic of the article - this form of entrepreneurship does not allow you to sell your business in one fell swoop as a complex of a ready-made business. It is no coincidence that all business valuation methods, enshrined in law, are tailored to legal entities. After all, you act as individual, and all contracts, property, permits, licenses, franchises, trademark rights, etc. are in your name.

The buyer will have to re-register all this on himself, spending a lot of time and money. Naturally, all costs, including payment for speed, affect the final transaction amount. And it is not a fact that, when re-concluding an agreement with a new entrepreneur, the landlord will provide the new owner with the same conditions as he does to you. He may simply not like the buyer's personality.

So, if you intend to sell your business, minimize the number of documents requiring re-registration in advance.
Transfer your status as an entrepreneur to the owner of an LLC or joint stock company It is advisable when your business has reached more or less significant scale. Then you can safely prepare to sell all or most of it.

On the contrary, when purchasing a business, remember about possible additional costs associated with the peculiarities of its organizational and legal form - individual entrepreneurs are not sold, only their property is subject to sale, and rights under concluded agreements are assigned.

One business, three costs!

When you decide to sell your business, you initially have little interest in the motives of potential buyers. However, it is motivation that can have a significant impact on the final price of the transaction, that is, on its market value. A buyer may have three main goals, but all of them are related to generating income:

1. Selling your business in parts or further resale. It is quite possible that you own real estate or the right to lease a land plot that is located in a promising area where active development is planned residential buildings or shopping complexes. Or is it the resale of a regional brand that you have developed, such as Petrov’s Krupa, to some large Russian or foreign agro-industrial holding, displacing local competitors.

Approximately according to this scheme, the once famous Armavir tobacco factory, which has now become a haven for numerous offices, was bought out and then resold to one of the international tobacco concerns. In this case, the concept of liquidation value is applicable - the price of assets minus the total amount of liabilities and costs of sale.

2. Income from the activities of the enterprise. The buyer is interested in preserving and developing the business. Some repurposing, reorganization or annexation is possible.

In this situation, we are talking about investment value, which takes into account the increase in profit from market expansion, the use of know-how, and reorganization plans of the proposed owner. Here you can bargain significantly, as Yahoo shareholders did, ultimately refusing Microsoft's super-lucrative offer of $44.6 billion. The guys from Yahoo apparently thought that their company would be worth much more in the future.

3. The combination of the maximum indicators of two values, liquidation and investment, results in a reasonable market value. It is usually possible to sell your business at this best price to professional investors who specialize in the acquisition, development and further sale of businesses. These can be local businessmen doing anything that brings in money, or representatives of large companies.

Therefore, if you consider your business profitable and promising, feel free to submit an offer to large investment companies and diversified holdings of oligarchs. Surely they don’t know about your existence and, if interested, they can give a fair price that competitors of your level cannot afford. You can also advertise on specialized bulletin boards or business portals. Today there is a lot of money in Russia, the owners of which are in search of investment objects.

What is the investor thinking?

Any investor, be it an investment fund or your neighbor, thinks about how quickly the invested funds will pay off and begin to generate income. This, by the way, is one of the most effective, but at the same time simple and logical way of assessing the value of a business. Professional appraisers would see in it elements of the "income" method.

In the late 1990s and early 2000s, an attractive payback period was in the small and medium range, and sometimes even big business Russia is 1.5-2 years old. As the value of the business increases, the payback period also increases to 2-3 years. And in large ones - up to 5. In the West, the standard is a term of 7-8 years, which is quite reasonable, given the lower cost of credit resources.

Several factors directly influence the payback period. Firstly, the overall cost of the business, its scale, becomes more expensive the longer you have to wait. But then every month there will be a much greater return.

Secondly, the value of the credit rate - the higher it is, the faster business must generate income. Otherwise, bank deposits will become a more attractive alternative than buying an existing business.

The third factor is the rise in prices for real estate, land and, accordingly, rental costs. Land and real estate are becoming more and more expensive, they specific gravity costs increase, which leads to an increase in expenses not related to business development, and therefore reduces overall profitability and lengthens the payback period.

The fourth determining point is the turnover cycle. The shorter it is, the less required working capital and funds to start and, therefore, time to recoup the money. Selling newspapers and magazines is one thing, but doing construction and repair work is another. Although the profitability is almost the same.

In practice, the calculation is simple. Let's say your two outlets(standard kiosks) give 120 thousand rubles. net profit per month. The kiosks are your property, but are built on leased municipal land. They are not considered full-fledged real estate; they are listed as temporary structures, and they will not allow you to buy the land under them, and they can be seized at any time for city needs. Therefore, as an asset they have no independent value. In this case, a reasonable selling price for your business, taking into account the profitability and short period of turnover, may be equal to the amount of profit that you receive in a period of one to two years - from 1.44 million to 2.88 million rubles.

Many large companies also adhere to the temporary principle. For example, the Thunder company, which owns a chain of stores retail"Magnit" adhered to the following tactics - when opening a store in a new location, the company waited 4 months. If the store began to pay for itself, they left it. If not, they closed it.

For the price of admission, or make a business plan

Estimating the value of a business depending on its payback period is, of course, convenient and simple, but it misses several important things that could increase its price. Firstly, how much do similar offers cost on the market, and how much time and money would it take for the buyer to create and develop such a business on their own? It is quite possible that for you personally, thanks to connections in the mayor’s office or equipment or premises purchased for the occasion, your business cost much less and you developed faster. Selling based only on the payback period would be illogical. Therefore, it is useful to at least roughly estimate the cost of the “entrance ticket” from scratch.

Calculate how much you would spend by the time of sale at current prices on rent, purchase of equipment, advertising, what would be the total amount of costs until the first profits. Simply put, draw up a rough business plan, but taking into account your knowledge of all the nuances. Independent appraisers call this approach “costly”.

A business plan, even the simplest one, will help you convince a potential buyer of the prospects of buying your business. Try to take into account all your strongest points in this business plan for the client. competitive advantages. For example, your hairdresser employs the best hairdressers in the area, for whom people come to you who are ready to overpay for quality. Or that you have the best imported production equipment in the area bakery products or dumplings.

A good name is worth a lot

You're probably not the only one looking to sell a business like yours. Naturally, a potential buyer will compare all available offers, and most likely this will require the use of elements of the so-called “comparative” approach. The accuracy of the valuation depends on the quality of the data collected, since using this approach it is necessary to collect reliable information on recent sales of comparable properties.
This data includes: economic characteristics, time of sale, location, terms of sale and terms of financing. For example, it is one thing to sell a business for cash, another thing to sell it on credit.

The effectiveness of the comparative approach is reduced if there were few transactions or a lot of time passed between them; if the market is in an abnormal state, since rapid changes in the market lead to distortion of indicators. For example, in a district or city a new head was appointed (elected), a well-known lover of property redistribution. Or, as in Sochi, they decided to hold the Olympic Games.

In order not to suffer too much with a comparative assessment of a business, you can resort to analyzing franchise offers similar to your profile, which indicate the requirements for the buyer of a franchise. The main thing is the amount of investment for the business to operate and develop. Simply put, the franchise seller offers you to work using his technologies, under his brand, style, etc. The franchise can be sold to almost any type of small and medium-sized business: sushi delivery, travel agencies, restaurants, stamp shops and real estate agencies, etc. Type “franchise” or “franchise directory” into an Internet search engine and you will find hundreds of offers indicating the amount required to create a business.

At the same time, the comparative approach allows you to focus on your individual characteristics, on intangible assets created during work. Western economists, and now Russian ones, use the concept of “goodwill” (goodwill).
Goodwill is essentially the sum of those business elements or personal qualities that encourage customers to continue using the services of a given enterprise or entrepreneur, and which generate profits in excess of those that come from tangible as well as intangible assets that can be accurately assessed in monetary terms.

It occurs when you make a profit higher than the average in a given area of ​​business, that is, people are predisposed to buy from you.

Goodwill includes a favorable location, an established clientele, and the authority of individual employees. This factor cannot be felt and calculated, but it must be assessed. After all, the development of any business is based on good relationships, that is, the good will of sellers and buyers. And your task is to convince the buyer of your business that you have developed goodwill, and it is not in vain that he pays an additional 10-20 percent for a promising and well-promoted business.

When you can’t do without an appraiser

Having fired a couple of arrows towards the institute of professional appraisers, for the sake of truth it is worth noting that in practice there are times when it is simply impossible to do without professional appraisers.

Firstly, when arguing with tax office regarding the market value of the object of sale and purchase in the form of real estate. For example, you purchased premises for a workshop for 3 million rubles, and the tax authorities, in accordance with Article 40 of the Tax Code, having the right to control prices to determine the tax base, say - you, brother, underestimated the cost of the premises and did not pay additional taxes.

This is where the conclusion of a professional appraiser helps in a dispute with the inspectorate, which will become an argument for establishing the transaction price corresponding to the current market value. A professional’s opinion has the status of an official document and can be used in an arbitration court as convincing evidence when considering cases related to determining the completeness and correctness of the calculation and payment of taxes. In addition, sometimes it is beneficial to officially revaluate the property of an enterprise downward, which helps save on property taxes.

The second category of entrepreneur’s partners, in relationships with which the appraiser’s opinion can be useful, are banks. By issuing loans against collateral, banks try to underestimate the value of the pledged property. Determining the real market value of the property by an independent appraiser makes it possible to establish a fair relationship between the value of the mortgaged property and the size of the loan. In the event of loan default, an official conclusion helps prevent disagreements between the parties to the transaction that arise when foreclosure on the mortgaged property.
Professional appraisers are also a great help if you resort to the services of insurance companies. There are several hidden points here that insurers prefer to keep silent about.

A case from one's life. The entrepreneur insured the purchased goods for a fairly decent amount. warehouses. But when the fire happened, Insurance Company offered a much smaller amount to be paid than was specified in the contract, stating that, based on current legislation, the contract is void in terms of the excess of the insured amount over the actual (market) value of the property. It was, of course, impossible to determine in hindsight how much the burned warehouse was worth. At the same time, the overpaid insurance premium was not returned to the entrepreneur.

If, at the time of concluding the insurance contract, the entrepreneur was armed with the appraiser's conclusion, no problems would have arisen - the examination carried out by an independent appraiser categorically does not allow the insurer to subsequently challenge the insured amount under the contract.

There are other times when professional assessment helps entrepreneurs. Among them, it should be noted the assessment of damage in the event of an insured event, as well as damage to the property of the entrepreneur or third parties. Knowing how much you really lost will help you clearly justify your position in controversial situation, including in litigation.

D. Protasov, business consultant
Magazine "Modern Entrepreneur. Individual approach to business", N 3, March 2008