Sell your company for and how can you increase its value?
How much would I sell your company for and how can I increase its value? As the CEO of a venture capital firm, I think, "What is the enterprise value of your company? For example, I wonder how a company founded with a capital of 10 million yen is valued from the outside. If the valuation is 100 million yen, this is a talented entrepreneur who has multiplied the value of his company by 10.
However, his value may be less than 11 million yen. It may be equal to 1 million yen. If he claims to "sell the company," he will be ruthlessly valued by the buyer (the candidate). But I can't say that if I don't want to sell it.
Increase the value of the company by the amount I would sell your company for.
Requirements that determine the value of the company: the requirements that determine the value of the company really boil down to the following four points. I will then present the points that I, as a manager, would like to follow to increase the value of the company and a method to easily calculate the value of the company.
Ideally, the highest valuation will be obtained by a company that operates in an industry in which buyers are very interested (or have many buyers), has a business model that is expected to grow, stable profits for many years, and strong retained earnings over the long term.
How can a venture firm add value to its business?
- Once the four points for calculating enterprise value are known, entrepreneurs need to increase one of them to increase enterprise value.
- However, very few companies implement these four projects. If you think about it, it is strange to ask a venture capital company about the amount of retained earnings.
Basically, it is a question of the extent to which the criteria are met: "whether the acquirer operates in an attractive industry," "whether the business model is likely to grow," and "whether the acquirer is financially sound." In general, it is possible to get a good deal as a venture capitalist if at least two conditions are met.
First, we make a simple assessment of the company's performance.
Beyond the hard facts, there is a simple way to calculate the business value of a company. It is a calculation method based solely on the equity in the balance sheet prepared in the financial statements and the numerical value of operating income.
Because of this simplicity, anyone with financial records can easily perform the calculation.
The problem is the adjustment factor. The adjustment factor should be 1 or more if "expected future growth" or "has excellent assets." On the other hand, if "no future growth is expected" or "has some negative factors," the company should enter a number less than 1.
Company for and how can you increase its value?
An example would be a company with net assets of 50 million yen and operating income of 10 million yen, which has good business partners and is expected to grow in the future. In this case, the adjustment factor is a number equal to or greater than 1, so suppose it is 1.3 this time.
The evaluation of a company can be done in this way. This evaluation is simple and does not take into account business content, business scale, credit status, asset condition, etc. Therefore, it is recommended to use it only as a reference after recognition.