The estimate of the financial value of the company takes into account multiple criteria :

• Current and past revenue (last 3-5 fiscal years)

• Financial structure

• Customer Portfolio

• State of the market and competition

• Reputation of the company

• Company know-how

• Material and equipment

Calculating the valuation of a company gives an estimate at a time T. It is therefore recommended that the operation be renewed regularly to take account of market developments.

It exists multiple methods company valuation. It is important to combine each of these methods to obtain a valuation as close as possible to the real value.

Heritage method

The heritage method is to evaluate the accounting net assets of the company, i.e. the difference between its assets (assets) and its liabilities (debts).

This calculation is based on the analysis of the accounting balances for the last 3 financial years.

This method alone does not provide a fair financial value for the company. It does not take into account the profitability and development potential of the company.

Comparative method

The comparative method is to compare the company to other similar companies (activity, size and maturity level) to apply it a scale depending on market prices.

This method is suitable for divestitures of businesses for which there is an official rating. However, it does not take into account the value of the commercial lease and the significant price differences that may be observed.

Profitability method

The profitability method is to estimate future capacity the company to make a profit. The resulting value should then be weighted taking into account the risk of not achieving the predictions. The estimate should cover a period of no more than 7 years to reduce the margin of error.

This method assumes that the company's profitability will increase over the next few years. In practice, this performance is rarely observed.

Valuation does not allow the exact sale price to be fixed, but rather to obtain orders of magnitude which will guide the negotiations.

As with any transaction, the sale price of your company follows the law of supply and demand.

A company coveted by multiple buyers will attract higher purchase offers.

Conversely, if your company attracts few potential buyers, you'll need to lower your selling price.

In fact, the company's final selling price reflects both:

• The price that you're ready to accept

• And the price that the buyer is able to finance without compromising the future development of the company to be taken over.