What is my technology business worth?

Knowledge is power, especially in situations you have full control over – which is why tracking your business‘ value is good practice.

However, acquiring an understanding of what drives this value will help you make key decisions about its strategy and direction.

Whether selling is on your radar or not, understanding what makes your company valuable to buyers can inform your strategy and guide your plans around growth, as well as to help you make informed decisions on where to invest in your business. When you know and understand the value drivers of your business, you can steer future transformation.

Define your ambitions and understand your goals, otherwise you cannot set the strategic direction for achieving your aspirations. The role of your professional adviser is to understand where you want to get to and advise you on the best way of getting there to achieve your objectives.

At Knight, we tend to start at the end, focusing on your goals and aspirations. We work in the technology and telecoms sector and have access to unique insights and trends. As such, we advise our clients on whether they can realise their financial ambitions now, or alternatively help them to construct a roadmap which aims to achieve this in the future.

Let’s consider the buyer’s perspective…

In today’s market, the most common way for buyers and investors to value a business is based on a multiple of EBITDA – on earnings before interest, taxes, depreciation, and amortisation. Essentially, this calculation is a proxy for the cash generation of the business.

Valuable when assessing a business:

· Growth
· Customers
· Product proposition
· Intellectual property

Factors for wanting to invest in your business:

· Track record
· Size of your typical customers
· Whether you have a differentiator
· Strong in a specific sector/client type

When considering how much to offer, the buyer will consider the potential for growth (again), as well as size, risk, competition and track record.

In taking the next step, be confident in every aspect of your business’ value and potential deal. The process is very lengthy and will require a significant amount of time and resources and in parts can be an intense and emotional process. Consider that EBITDA can be manipulated or presented in any number of ways. Seek professional advice and consult with a Knight expert before taking any steps.