Business Valuation
Understanding what a business is worth today — and what would make it worth more.
Valuation with a purpose attached
A valuation is only useful if it is built for a decision. A sale, an acquisition, a shareholder buy-out, a capital raise and an internal planning exercise all justify different levels of depth and different assumptions.
We start by agreeing the purpose, then apply the methods the evidence supports. Where the market evidence is thin — as it often is in the lower-middle-market — we say so, and present a range with the reasoning behind each end of it.
What a valuation engagement covers
- Indicative business valuation reports for transaction purposes
- Enterprise value and equity value analysis
- Maintainable EBITDA assessment and earnings normalisation
- Market multiple analysis
- Comparable company analysis
- Precedent transaction analysis where evidence is available
- Discounted cash flow analysis where appropriate
- Asset-based valuation where appropriate
- Sensitivity and scenario analysis
- Valuation range and key value drivers
- Pre-sale valuation and transaction readiness review
Normalising earnings
In owner-managed businesses the reported profit rarely equals the earnings a buyer would inherit. Before any multiple is applied we work through the adjustments that a buyer's adviser will look for anyway.
Typical adjustments
- Owner remuneration to a market rate
- Non-trading and personal costs
- One-off income and one-off costs
- Related-party transactions
- Property costs at market rent
Quality tests
- Revenue recognition and contract terms
- Cash conversion against reported profit
- Gross margin stability
- Working-capital movements
- Capitalised costs
What we flag
- Earnings that depend on one customer
- Earnings that depend on the owner
- Margins that have not been tested by cost inflation
- Deferred maintenance or capital spend
- Contingent liabilities
From earnings to a multiple
A multiple is not a fixed property of an industry. Two businesses with identical EBITDA can be worth materially different amounts because of customer concentration, management depth, contract quality, compliance history and the state of the records.
We set out the factors supporting the range and the factors constraining it, so an owner can see which of them are within their control before a sale process starts.
Value drivers we assess
Financial quality, commercial quality, operational resilience, management depth, governance and compliance, and transaction readiness. Each is examined in our Business Risk & Value Framework.
Valuation disclaimer
Indicative valuations are prepared for the agreed purpose only, on the basis of information supplied by the client and information reasonably available to us. They are not statutory, formal or expert-determination valuations unless Crystal Zest is expressly engaged on that basis, and they should not be relied on by third parties without our written consent.
Start a confidential conversation
Whether you are preparing to sell, looking to acquire, raising capital or trying to lift the value of a business you already own, the first step is a short, confidential discussion about the situation.