Interested in knowing what is my company worth?

Are you wondering what is my company worth? In this article, BrightOrange is happy to give you a detailed explanation of how to calculate your company’s value.

To get straight to the point, the economic value of your business is subjective and depends on three factors: money, time and risk. The economic value of your business is determined by an individual based on expectations, future cash flows and the associated risks. How does this work in practice? Which method can be used? And how to calculate company value? These are questions we will provide clear answers to in this blog.

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When is it important to calculate company value?

A business valuation refers to the economic value (in euros) of your business. This value can be of great importance in various situations. For example, in tax matters, disputes with shareholders, situations involving potential claims, or when you are planning to sell your business. To be able to take the right next steps, it is important that you know: what is my company worth?

There are various methods and techniques to calculate company value, and there are many factors to take into account. Every business is unique and every situation is different. That is why it is important to determine the most appropriate method. Ultimately, the economic value provides a good yardstick for negotiations.

How to determine what your business is worth

If you’re wondering: what is my company worth? It’s worth bearing in mind that a successful track record does not provide an accurate prediction for the future. It’s important to use reliable assumptions. This means that expectations such as future cash flows, the time at which they will occur, and the risks they entail must be assessed as realistically as possible.

These expectations are, in fact, assigned a value. This is done on the grounds of your company’s products/services, financial performance, market conditions and debts. Furthermore, additional value is also attributed to factors such as customer loyalty, brand awareness and the expertise of the staff. All of this falls under goodwill. Therefore, there are many factors that come into play when answering the question: What is my company worth?’

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How To Determine What Your Business Is Worth

Subjective business valuation

What is my company worth? There is no single fixed calculation method or technique on how to determine what your business is worth. Every valuation expert is likely to arrive at a different (subjective) valuation, as they do not share the same vision or expectations for the future – and that is only logical. That is why it is important that arguments are well-founded and allow room for negotiation, ultimately resulting in a fair price for both parties. It is not without reason that a business valuation is, by definition, subjective and dependent on the valuation subject.

Calculating the value of your business

As mentioned, there are various methods to calculate your company value. These can range from a QuickScan to an advanced valuation based on Monte Carlo simulations. However, the most reliable and widely used method for calculating your business value is the Discounted Cash Flow (DCF) method.

Will the DCF method be used? If so, a detailed forecast of future cash flows will be prepared. Would you like to know more? If so, we would be happy to refer you to our article: Calculating business value: the methods.

Business valuation by BrightOrange

At BrightOrange, we answer your question: what is my company worth?

BrightOrange has over 25 years’ experience in the sale and purchase of businesses, valuations and mediation. As valuation specialists (registered as Registered Valuators with the Dutch Institute of Registered Valuators), our partners and consultants possess the necessary expertise and experience across a range of situations and sectors. Would you like to know: what is my company worth? We are qualified to tailor this perfectly to your situation. Do you have any questions or would you like more information about what is my company worth? Please feel free to contact us to explore the options. We would also be happy to help you sell your business successfully.