It is difficult to assess the worth of companies.
Some people think that their assets are worth exactly as much as buyers are willing to pay for them. But this is not entirely true. If you are thinking about sell my ecommerce business consult with intermediaries who are active in this business and have qualifications no worse than Valley Biggs. With their help, it will be possible to have your business valued correctly.
But hiring an intermediary is not the only thing worth doing. First and foremost, it’s important to figure out how to value an ecommerce business yourself. Then you can avoid distrusting the advice of an intermediary and make the best possible deal for yourself. And it’s best to start learning about business valuation with popular ecommerce business valuation methods.
Types of ecommerce industry worth
When studying the ecommerce business valuation formula, you will notice that it is based on certain terms and methodology of business valuation. The most common methods of valuing a business are as follows:
- discretionary income;
- discounted cash flows;
- sales precedents.
Each of these methods has its peculiarities. Therefore, they are worth exploring in more detail.
Valuation through seller’s discretionary income
it’s a popular criterion for average ecommerce business valuation multiple is considered to be the net income of the company. It is usually valued for the 1-year period and a multiplier of 1,5-3,5 and periodically 5 is applied. For example, there is a company working in this field and for the last year, it earned 200 thousand Euros. When calculating the other factors, the multiplier is 2.5. Multiplying them we get the value of the company in 5 million Euros. This is its estimated value.
It is not easy to determine this multiplier. To calculate the average ecommerce business valuation multiple take into account many factors, among which are revenue growth, consistency in decisions, company scale, volume of operations, etc.
Discounted cash-flow calculation
Among the standard methods of free ecommerce business valuation is also the discounted cash-flow method. This is an assessment of the potential return on investment, which is adjusted for the real-time value of money. This indicator calculates the free cash-flows for the past year. The analysis is done by subtracting capital outlay from operating cash-flows. The flows are then projected to grow over 5 years and the funds are discounted.
Studying different tips for valuing an ecommerce business you can see that this method allows you to comprehend the worth of a company before you incorporate company in singapore. However, it is not always necessary to use it as the main evaluation indicator. In particular, due to it, you can see significant progress in earning finances, which in reality will turn out to be even a small loss compared to the current situation. This can be misleading for the buyer.
Sales precedent
Considering the various factors affecting ecommerce business valuation one should not forget to check the value of similar transactions in the market. This allows you to get an approximate pricing benchmark and understand what similar companies were sold for. But in this case, it is an extremely rough calculation.
The assets, capabilities, and growth potential of the company could be different from your business situation. So you need to consider more factors to understand the real value of your business. That is an assessment of your financial condition, customer portfolio, assets, and current strategy. At a minimum, these metrics will help you get a more realistic realization of the value of the enterprise.
Who can help with a company valuation
It is essential to comperehend if the moment has come when to get a professional ecommerce business valuation. It must be a firm decision to sell, otherwise it will just be a waste of finances because of curiosity. If you are ready to evaluate your company, we recommend that you contact the experts at Valley Biggs. Our staff will conduct a thorough evaluation of your assets and will be able to tell you the real value of the company and for what price you can realize your assets. For a consultation please contact our managers in any convenient way.