Once a year - for management review

Someone from the wise noticed that the goal will be achieved not by the one who moves faster, but by 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 the general case, valuation is carried out in two situations - when making a transaction (this can be a sale and purchase, a pledge, an M&A 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 arbitrator for the parties to the transaction, and on the other hand, has the necessary methodological tools for a comprehensive assessment. In the second case we are talking about the magnitude of the value, which serves as a guideline for business owners and top managers. This cost can be calculated by the entrepreneur himself. It is this assessment that will be discussed in the article.

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

There is no universal formula, substituting a couple of numbers into which the owner will receive the exact value of his business. Imagine that business is a child: this one is stronger, this one is smarter, this one is smarter. Who's to 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 company? Apparently not.

Business valuation is based on the use of three main approaches: cost, comparative and profitable. Each of these approaches reflects different sides of the company being valued, namely: the side of the seller, the buyer 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 for conducting a management analysis, at least once a year, it is quite enough.

But first of all, it is necessary to establish some restrictions and assumptions.

First, formulas are formulas. Valuation formulas are applicable 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 uses assets efficiently 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 business for the production of souvenirs if the only virtuoso-master is the owner). Or, in some cases, it is unprofitable 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, but it can be very sick. It is one thing to evaluate an existing, only re-equipped enterprise with a streamlined production cycle, and another - an enterprise with bailiffs on the doorstep. The article deals with the valuation of a business in the "as is" state, i.e. subject to the constancy of the main factors that shape this business.

Thirdly, no one knows better than the owner of a business, even the tax office. Therefore, the calculation of 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 cost of a small business is as follows:

V B \u003d 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 account and in cash

V NI - the market value of real estate.

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

As a rule, a small business is built on rented premises, so the V NI indicator is 0. If a business is built on its own premises, then their cost is simply added. The cost of real estate is quite simple to determine by contacting a real estate agency.

It is possible that the entity being assessed has some cash on hand, in a current account or in bank deposits. Their sum is the value of V DS.

As a rule, no enterprise can exist without debts. At the same time, the enterprise may have both its own debts (accounts payable), and it may also be owed to the enterprise (accounts receivable). Their difference is the value of V DZ -V KZ.

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 V RA, which determines the cost of an entrepreneur's labor in organizing sales, setting up business processes, hiring personnel, etc., is the value of settlement assets. The basis for their calculation, as a rule, is the average monthly revenue or annual net profit. 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 (4.5 million rubles) is being evaluated. The average monthly income of the cafe over the past six months is 0.4 million rubles. The company's revenue grew by 5% in six months. There was a circle regular customers that bring at least 30% of revenue. The enterprise has an outstanding loan in the amount of 1 million rubles. As of the assessment date, the cafe purchased food and alcohol for 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 probable value 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 firm. To resolve this issue, it is advisable to consider the most significant factors on which the market value depends:

1. The quality of amenities offered by the firm being assessed

2. Dynamics cash flows generated by business

3. The state of the company's inventory

4. Level of competition

5. Opportunity to create 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, valuing 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.

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

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

When it comes to assessing the value of a company, there are an almost infinite number of ways to form it. But the most practical and adequate in this matter is comparative method.

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

Let's say we have a conditional company "A", which is engaged in the production of shoes in Poland. Let's look at her example, how the valuation of the company is formed.

If you want to know the value of your company, then, first of all, you should start with a benchmark. That is, choose companies-analogues and analyze their value. 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 that you will encounter is the almost complete lack of information about peer companies, on the basis of which you can build 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 about M&A transactions not only in Belarus, but also abroad

As a result, you will receive an array of data for different companies, regions, etc. Now the task is to choose the correct peer companies on the basis of which you will make your assessment. For this you need:

1. Identify a broad sample of companies based on general criteria that characterize your company (industry, region, revenue, product or service).

Let's look at our company "A". Using data on public businesses, we will compile a list of companies involved in the production of shoes 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 revenue from $30 million to$ 150 million. So, we got 5 companies (highlighted in dark). Revenue figures are in $ million.

The next step is the choice of a multiplier, on the basis of which we will evaluate our company.

Historically, there have been 3 types of multipliers:

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

Suppose, as a result, you have a sample of 5 peer companies, and each of them has its own multiplier value. Next target- Based on the data obtained, determine the value of the multiplier for your company. For this you need:

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

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

2. "Weigh" intermediate results

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

As a result, we got 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 affect 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)

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

It depends on:

• the marginality of your business, that is, the net profit margin (abbreviation "MARG")
• from the country in which your company operates (indicated by the abbreviation "DUM")
• from the industry in which you work (in our formula it is "BETA")
• from 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 G variable)
• cost equity company (usually denoted by the symbol "Ke")

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

Each country causes 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 set at 6.296. Let's look at the risks: we can exclude some of the risks and variables, for example, the country risk, because practically all companies from Poland got into the field of our comparison.

If we assume that the profitability of our company is somewhat lower than the industry average in Poland, then we need to take into account the discount on profitability. In addition, Company A does not have audited accounts for international standards. In this connection, it is necessary to make a discount to our calculated multiplier.

As a result, our company will cost 5.91 EBITDA.

Thus, in the example of the conditional company "A", we see that the cost depends on many variables and contexts that are important to consider.

You can see how different estimates can differ for the same company on the Deal simulator.

All in all, valuing a company is as exciting as playing chess.

Viktor Denisevich

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

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

Buying a ready-made business in St. Petersburg is a complex and time-consuming process. One of the key steps is the evaluation of a finished 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 overstates the cost, because the object is perceived by him as a child in which he has invested his strength and money. Businessmen selling ready business in St. Petersburg, sometimes even 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 object.

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

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

The task of a professional broker is to ensure that both the seller and the buyer win in the end. In the black, both can remain in the event that a correct assessment of the business has been made.

Assessment Methods

According to experts, there are several approaches to evaluating a ready-made business:

Cost approach. In order to give a correct estimate, you need to calculate what costs you would incur if you decided to create a business from scratch: how much money would you spend on repairing the premises, purchasing equipment and supplies, recruiting staff. This also includes months of "downtime", for which you will also need to pay rent.

For example, according to the drawn up 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 seller of the business that it is more profitable for you to organize your own business than to acquire his business.

This is a good method, however, Altera Invest's professional business brokers point out that this kind of assessment does not take into account the intangible value of the company. That is, reputation, brand, various know-how, accumulated client base etc.

Comparative approach. Do not forget that no two businesses are the same. This is due to the fact that even if one ready-made business is located on the main street, and the other is 50 meters from it, but around the corner, of course, 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 evaluating a finished 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 way. This is a combination of the two above. So you can get the most objective picture. A competent and reliable assessment of a ready-made business can only be given by professionals who have been working on the market for many years.

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

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

When buying 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) in two ways: create new business or buy ready made. After evaluating the pros and cons of the second option, you can decide whether it is right, or it is better to use the first option.

Advantages of a ready-made business:

• History of development, good or bad, which makes it possible to evaluate it.
• Availability of premises and equipment.
• Completed staff.
• Established relationships and distribution channels.
• A finished product (service), sometimes a well-known brand.
• A certain demand for goods (services), the ability to predict its change.
• Detailed financial and accounting reports.

Cons of a ready-made business:

• The equipment may be worn out, and technological processes- outdated.
• The lease may not be renewed.
• Staff may be underskilled
• Counterparties may be unreliable, relations with them could be spoiled by the previous owner.
• Subsequently, debt obligations (unpaid taxes, penalties and customs duties or warranties).

STEP 2. Choose the type of business to buy

To do this, you need to answer several questions:

1. Is there any kind of activity and business that you have dreamed of?

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

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

4. Are you interested in import-export business?

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

Experts recommend that you first make a choice between production, retail, wholesale and services, then resolve the issue of import-export, and then determine a specific product (service) or market within the selected sector.

STEP 3. Decide on funds

First of all, decide how much of your own funds you can allocate for 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 for the acquisition of 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 borrow. Your personal assets can also serve as collateral for a loan to buy a new business.

STEP 4. Choose the cost-effective options

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

Note: sellers do not always “publicly” announce the sale of their business. The reason is the need for the strictest confidentiality, as the announcement of the sale can cause excitement among customers, employees and suppliers. And many potential sellers prefer to use face-to-face 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 the sale of selected companies

The previous owner may have several of them:

• Changing of the living place. Lack of direct control and management of the process.
• Disagreements between owners. No joint agreement was reached on the ways of further development of the company.
• Loss of interest in business. After 6-8 years, the activity may simply cease to be satisfying.
• Illness, old age. Limited opportunities for the owner to manage the business, 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 activities 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 bring sufficient profit (there is a recession and decline in the industry business activity; the company is in danger of bankruptcy; weak management; the company is involved in criminal scams, etc.);
• the owner is going to do 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 the purchase of a company is expedient 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 options 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 large enterprises are listed on the open stock market. Therefore, when evaluating small and medium-sized businesses, experts recommend using the following approaches: profitable, market and costly.

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 income is positive and stable.

Market Approach

The value of a business is estimated by comparing 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 an analogue company (V2) and its base indicator (R2) to the base 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 enterprises must match, quantitative and quality characteristics companies should be approximately equal.

Cost approach

The cost of a business is determined by the amount of resources spent on its reproduction or replacement, taking into account physical and obsolescence. This approach is most effective when the buyer is going to compare the cost of acquiring a business with the cost of setting up 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 turn to 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 areas of law, mathematical analysis, economics, accounting and audit.

At this stage, as a rule, one suitable option remains.

STEP 7. Study the chosen 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 (“due diligence”) - a comprehensive check of the seller for “due diligence”. At a minimum, it will allow clarifying the accuracy of the legal and financial information provided, verifying the correctness of the paperwork and their compliance with applicable law. As a maximum, "due diligence" includes conducting a legal and financial audit of accounting and tax accounting, assessing the compliance of top managers with their positions, conducting an inventory of property, etc. to infinity.

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

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

Serious reasons for concern are also:

1. Shortened rigid time frame for selling a business.

2. Missing key information on the object.

3. Obtaining even existing information is difficult.

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

5. It was found that at least part of the information about the object was distorted or misinterpreted by the seller.

STEP 8. Minimize possible risks

1. Make inquiries about anything that could potentially harm your business.

2. Find out the state of the property complex and the features of its location. This will prevent problems, for example, in connection with the termination of the lease.

3. It is necessary to rely on facts and, if possible, not to take a word, 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 obligation on the absence of debts that do not pass through the accounting department. It is signed by all founders and the CEO. The legal protection of the buyer is that, after signing the guarantee, they are personally liable for any borrowing by the company over the past three years. In case of occurrence negative consequences the buyer has the opportunity to send creditors to their real debtor, or, if the case goes to court, file a recourse claim to protect their rights.

5. Lawyers also recommend compiling detailed plan transfer of management powers. This is especially important for maintaining relationships with customers, suppliers, other business partners and employees of the acquiree. After all, it is important for the buyer to maintain a viable business.

6. In the agreement with the seller, it must be indicated that the new owner acquires only those debts related to the activities of the enterprise that are specified in the agreement. And the debts connected with the previous activity 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 negotiating a 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 frivolous buyers, so do not be surprised if you are asked to pay a deposit, similar to what is done during 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 acquire the business. Naturally, start with more favorable conditions for yourself. Be prepared for the seller to meet your first offer with terms you find unfair. This is an inevitable part of bargaining. If your intentions are serious, work towards conditions that you agree to accept.

STEP 10. Get a business!

Reference

Ready-made business sales market: results of 2006

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

The most demanded 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).

Offers of $10-20 thousand prevail among travel agencies, for which the demand is usually very insignificant. Worthy offers can be considered travel companies, which have not only a travel agency, but also a tour operator license, having their own representatives abroad and contracts with hotels and inns. But the price of such a company will already be from $30,000 and more.

There have been certain preferences in acquiring a business related to the provision of intangible services: consulting, auditing companies, educational institutions. Investors are ready to invest up to $150,000 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. There were more proposals for the sale of advertising and advertising production companies.

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

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

Among manufacturing enterprises factories for the production of bricks, blocks, 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 consumers will remain. At the same time, the demand for such a type of business as the production of PVC windows and doors is decreasing. There are proposals for food production (sausage, confectionery shops) worth $400-700 thousand, but the demand for them is low.

Articles

How to evaluate a ready-made 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 the 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, by and large, a market valuation of a business? This is a determination of the cost for which it can be sold, and what profit it will bring in the future. Professional appraisers have several basic valuation methods at their disposal, the content of which is widely covered in the valuation literature and enshrined in valuation legislation.

Three methods are used in Russia: the "income approach", " costly approach" and "comparative approach". All these methods are complex, require special training, and for an ordinary entrepreneur, whose motto is "act and earn!", They will seem unnecessarily complicated and have very distant relationship.

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

Alas, not always. Otherwise stock market, stock trading and other securities would simply die, or would never experience the colossal fluctuations that we periodically observe. Indeed, in the stock markets, especially in countries with developed and rapidly developing economies, colossal money is spinning. Investment funds, management 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 business valuation methods were correct, then the movement of funds in the stock markets would be insignificant, since everyone represented quite accurately how much one could get by investing in a particular company. In fact, the stock market is very volatile and subject to significant fluctuations, sometimes contrary to the obvious logic and methods of calculating business valuation.

Take, for example, the latest stock market crisis. China suffered the greatest losses - 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 amounted to 11.4 percent, the forecast for 2008 is approximately the same. So where for short term one-fifth of China's potential evaporated? It turns out that professional appraisers corrected their forecasts so quickly, having made a mistake by trillions of dollars?

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

Shortcomings of Individuals

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

Many Russians, when starting their own business, register as individual entrepreneurs. Yes, there are a lot of advantages in this form: ease of registration, lower penalties, the optionality of making a seal 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 ready-made businesses. It is no coincidence that all business valuation methods enshrined in law are sharpened under legal entities. After all, you are acting as individual, and all contracts, property, permits, licenses, franchises, trademark rights, and the like are in your name.

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

So, if you intend to sell your business, in advance, minimize the number of documents that require re-registration.
Transfer your status as an entrepreneur to the owner of an LLC or joint-stock company appropriate when your business has reached a more or less significant scale. Then you can safely prepare for its sale in whole or in large part.

On the contrary, when purchasing a business, remember about the 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 the rights under the concluded agreements are assigned.

One business, three costs!

When you are about to sell your business, you have little interest in the motives of potential buyers at first. 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 can have three main goals, but they are all related to generating income:

1. Sale of your business in parts or further resale. It is possible that you own real estate or the right to lease a land plot located in a promising area where active development is planned residential buildings or shopping malls. 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 that is ousting competitors locally.

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 maintaining and developing the business. Perhaps some repurposing, reorganization or affiliation.

In this situation, we are talking about investment value, which takes into account the increase in profits from market expansion, the use of know-how, reorganization plans of the proposed owner. There's a lot of bargaining to be had here, just as Yahoo's shareholders did when they finally turned down Microsoft's super lucrative $44.6 billion offer. The guys from Yahoo apparently felt that in the future their company would cost much more.

3. The combination of the maximum indicators of the two values, liquidation and investment, results in a reasonable market value. It is possible, as a rule, to sell your business at this most favorable price to professional investors who specialize in acquiring, developing and further selling a business. These can be local businessmen involved in everything that brings money, and representatives of large companies.

Therefore, if you consider your business profitable and promising, feel free to contact large investment companies and diversified holdings of oligarchs with an offer. Surely they do not know about your existence and, if they are interested, they can give a fair price that is beyond the reach of competitors of your level. You can also advertise on specialized bulletin boards or business portals. Today in Russia there is a lot of money, the owners of which are looking for investment objects.

What is the investor thinking?

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

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

The payback period is directly affected by several factors. Firstly, the total cost of the business, its scale - the more expensive the longer you have to wait. But then every month there will be a much greater return.

Secondly, the value of the lending rate - the higher it is, the faster business should generate income. Otherwise, bank deposits will become a more attractive alternative than buying a ready-made business.

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

The fourth defining moment is the turnover cycle. The shorter it is, the less working capital and funds to start and, therefore, time to recapture the money. It is one thing to sell newspapers and magazines, and another to do construction and repair work. 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 income per month. The kiosks are owned by you, but built on rented municipal land. They are not considered full-fledged real estate objects, they appear as temporary structures, and they will not let you buy the land under them, but they can be withdrawn at any time for city needs. Therefore, as an asset, they do not represent independent value. In this case, a reasonable selling price of your business, given the profitability and short turnover period, 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 Tander company, which owns a chain of stores retail"Magnet" adhered to the following tactics - opening a store in a new place, the company waited 4 months. If the store began to pay for itself, they left it. If not, closed.

For the price of an entrance ticket, or draw up a business plan

Estimating the value of a business depending on the payback period is, of course, convenient and simple, but it misses several important things that could increase its price. First, how much do similar offers cost on the market, and how much time and money would it take for a buyer to create and develop such a business on their own? It is possible that for you personally, thanks to connections in the mayor's office or equipment or premises bought on the occasion, the 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 "entry ticket" from scratch.

Calculate how much you would have spent by the time of the sale at current prices of money on rent, purchase of equipment, advertising, what would be the total amount of costs until the moment of the first profits. Simply put, draw up an approximate business plan, but taking into account your knowledge of all the nuances. Such an approach is called "costly" by independent appraisers.

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

A good name is worth a lot

Surely you are not the only one who is going to sell a business like yours. Naturally, a potential buyer will compare all available offers, and most likely it will require the use of elements of the so-called "comparative" approach. The accuracy of the estimate depends on the quality of the collected data, 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 is 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, as rapid changes in the market lead to distortion of the indicators. For example, a new head, a well-known lover of the redistribution of property, was appointed (elected) in a district or city. Or, as in Sochi, they decided to hold the Olympic Games.

In order not to suffer much with a comparative assessment of a business, you can resort to analyzing franchise offers similar to your profile, which indicate the requirements for a franchise buyer. The main one is the amount of investment for the business to operate and develop. Simply put, the franchisee is asking you to work with their technology, brand, style, and so on. 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 needed to start a business.

However, the comparative approach allows you to focus on your individual characteristics, on intangible assets created during the work. Western economists, and now Russian ones, use such a concept as "goodwill" (goodwill - good will).
Goodwill is essentially a combination of those elements of a business or personal qualities that encourage customers to continue to use the services of this enterprise or this entrepreneur, and which generate a profit in excess of that which comes from tangible as well as intangible assets that are subject to an accurate monetary value.

It is said to occur when you make a profit higher than the average in this area of ​​\u200b\u200bbusiness, that is, people are predisposed to buy from you.

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

When You Can't Do Without an Appraiser

Having fired a couple of arrows in the direction of the institution of professional appraisers, for the sake of truth it is worth noting that in practice there are moments when you simply cannot do without professional appraisers.

First, when arguing with tax office about the market value of the object of purchase and sale in the form of real estate. For example, you bought a room 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 taxable base, they say - you, brother, underestimated the cost of the room and did not pay extra taxes.

This is where the conclusion of a professional appraiser helps in a dispute with the inspection, which will become an argument for setting the transaction price corresponding to the current market value. The opinion of a professional has the status of an official document and can be used in an arbitration court as convincing evidence in cases involving the determination of the completeness and correctness of the calculation and payment of taxes. In addition, sometimes it is beneficial to officially revalue the property of the enterprise downward, which helps to save on property tax.

The second category of partners of an entrepreneur, in relations with which the opinion of appraisers can be useful, are banks. By issuing secured loans, 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 ratio between the value of the pledged property and the amount of the loan. In case of non-repayment of the loan, the official conclusion contributes to the prevention of disagreements between the parties to the transaction that arise when foreclosing the pledged property.
Professional appraisers are of great help even if you resort to the services of insurance companies. There are several hidden points that insurers prefer to remain silent about.

A case from one's life. The entrepreneur insured for a fairly decent amount acquired by him warehouses. But when the fire broke out Insurance Company offered a much smaller amount to be paid than was indicated in the contract, stating that, on the basis of current legislation, the contract is void in terms of the excess of the sum insured over the actual (market) value of the property. It was of course impossible to determine in hindsight how much the burned warehouse cost. 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 conclusion of the appraiser, there would be no problems - the examination carried out by an independent appraiser categorically does not allow the insurer to subsequently dispute the sum insured 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, you will be able to 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