What is your business worth to a buyer?
By Andrew Isaacs, CIMA Member in Practice ·
Your business is worth what a buyer can see clearly and rely on, which is clean profit that does not depend on you personally, not your turnover. Two businesses billing the same can be worth very different money. AI Finance Partners shows owners what the business is worth today and what would move that number, long before anyone needs to sell anything.
Why are buyers interested in businesses like yours?
Somewhere along the way, a business can stop being the thing you built and turn into the thing you carry. The admin gets heavier, the rules pile up, the costs climb, and more of the day goes on keeping things running than on the work you actually enjoy. And while that is happening, in almost every trade, big investors are quietly buying up small firms one after another, and the ones they want most are run by owners who are tired and have nobody lined up to take over.
That is either an opportunity or a threat, and which one depends entirely on how ready you are. A buyer prices the numbers, not the name over the door. What actually changes hands in most deals is a customer base, a team and a set of accounts, and the cleaner and easier to read those accounts are, the better the price and the smoother the whole thing goes.
Two businesses billing the same can be worth very different money.
What makes a business worth more?
What surprises most owners is how little turnover matters. A buyer pays for profit that is clean, that does not lean on the owner, and that they can check quickly. They knock money off for anything that looks like it will walk out of the door when you do, and for anything they cannot get their head round in an afternoon. There is a cost side too, and it tends to land late. Selling up or winding down carries costs that never show while you are trading, and they can change what you actually walk away with.
None of this means you should sell, or sell soon. It means you should know what the business is worth and what moves that number, so that if the day ever comes, it is a decision you make from strength rather than exhaustion. And the reassuring part is that the work that makes a business worth more to a buyer is the same work that makes it lighter to run today. A written read of where you stand, through the Outside View, is a good place to start.
Andrew Isaacs is a CIMA Member in Practice and Practising Certificate Holder, and the founder of AI Finance Partners, the outsourced finance function for professional services firms turning over £500k to £5m across the South East. Legal cashiering is not part of what we do.