Selling & Acquiring Training Companies
Our Valuation Methodology
No, sorry, we can't give you a fixed
formula - and you are supposed to have
read all the previous pages first rather than
this page first!
You will be expecting us to say 'a business
is worth what a buyer is prepared to pay
and what a seller is prepared to accept'.
This is, of course, true but we have to work
together to agree a price, or at least a
A valuation is based on the trading history,
current performance, future order book,
financial results and the balance sheet. In
addition factors such as intellectual
property, new products and potential cost
savings etc all impact on the valuation.
We start with a multiple of sustainable
profit and refer to this as the 'adjusted
EBITDA' (earnings before interest, tax,
depreciation and amortisation). The
multiple figure selected tends to be driven
by market forces at the time of the sale.
Typically deals range from a multiple of
one (don't sell) to ten (grab that buyer).
We work together to ensure this profit
figure is as high as possible by determining
what can be 'added back' to the profit
figure via the Grooming Service. It is often
possible to agree an additional sum based
on the content of the balance sheet - this
could include surplus cash in bank,
Business Valuation Software
The Initial Assessment is followed by the
use of a computer application using an
analytical approach to assess the value of
the business. We assess the future cash
flow generated and the risks associated
with generating it and consider the
external factors that will also determine
the attractiveness of the investment. In
addition we compile a discounted free cash
flow to forecast the cash generation
capability of the business and mesh this
with the results of the first part of the
analysis. The computer analysis provides a
continuing value of operations following
the deduction of balance sheet liabilities.
Investment professionals favour this
With 'luck' the valuation derived by both
methods will be similar!