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How much is my company worth?
How much your company is worth is not decided by your revenue. It is decided by a combination of results, risk, growth and assets that in many cases do not even appear on the balance sheet. Two businesses with the same income statement can be sold for prices that differ by hundreds of thousands of euros.
It is a question almost every business owner has asked themselves. And very few can answer it with data.
When someone asks you how much your company is worth, the answer is usually an estimate based on intuition, on what was paid for a competitor, or on a figure you heard years ago. The problem is that most owners discover the real value of their company when they are already sitting at the negotiating table: facing an investor, a partner who wants to come in or a buyer. And by then it is too late to change it.
What does it mean to value a company?
Valuing a company means estimating what its price would be under normal market conditions. Put differently: how much an informed buyer would be willing to pay to acquire it today.
There is no single formula valid for every company. Value changes depending on the sector, the economic moment, the risk the buyer assumes, the growth potential and the quality of the assets, both tangible and intangible.
For this reason, a professional valuation is never based on a single financial figure. It combines economic data with strategic variables.
Value and price are not the same thing
It is the confusion that costs the most money:
Value is a technical, reasoned estimate of what the company is worth.
Price is what is ultimately paid, and it depends on the negotiation, the urgency of each party, the buyer’s synergies and the information each side holds.
Knowing the value is what allows you to defend the price. Without the former, the latter is set by the other side of the table.
What is it useful for? (even if you do not want to sell)
You do not need to be considering a sale to need this figure:
· Bringing in partners or investors without giving up more equity than necessary
· Negotiating financing on better terms
· Planning a generational handover or a distribution among heirs
· Designing the growth strategy knowing which levers move value
· Making asset-related decisions with sound judgment
And there is a less obvious benefit: a well-done valuation is a diagnosis. It tells you where you are losing value while you still have time to correct it.
What determines the value of your company
In short, seven factors explain most of the difference between two seemingly identical companies:
Financial results: The starting point, never the conclusion.
Growth potential: The buyer pays for the future, not the past.
Risk level: The lower the perceived risk, the higher the value.
Intangible assets: Brand, technology, clients, know-how.
Team and organization: If the company depends on you, it is worth less.
Sector and market: Not all sectors are valued in the same way.
Prior preparation: Arriving organized at a negotiation has a price.
We develop them one by one in The 7 factors that determine the value of your company.
How it is calculated
There are several methods, and professionals usually combine two or three to narrow down a reasonable range: EBITDA multiples, discounted cash flow, market comparables, net asset value and intangible asset valuation. Each one answers a different question and suits a different type of business.
You can see which one applies to your case in The most commonly used methods for valuing a company.
What to do from here
If you are just getting started, the order that works best is this:
Understand which factors are driving your value → the 7 factors.
Avoid the most common calculation mistakes → mistakes when valuing a company.
Act on what you can control → how to increase the value of your company
Do you want to understand what is determining the value of your company?
We analyze the financial and strategic variables that set the valuation of a business.
Tell us about your case and we will help you interpret it.
FAQs
How often should I value my company?
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Can a company with low profits be worth a lot?
We provide website planning, UX design, UI design, and responsive page design tailored to your brand and business goals. Depending on the project, development and ongoing support can also be included. You can choose only the services you need.
Do I need a large consultancy to get a first figure?
We provide website planning, UX design, UI design, and responsive page design tailored to your brand and business goals. Depending on the project, development and ongoing support can also be included. You can choose only the services you need.