Online Money Manager

A theoretical business value will only become real if the business’s assets can be transferred from vendor to purchaser. For example, if the price you ask for your business includes a goodwill value element, you will need to convince the purchaser that the goodwill value can be transferred to him, rather than ‘walking out of the door’ with you when you leave.

When valuing a business for sale that is operated as a limited company it is necessary to be clear about what is being sold. There are usually two possibilities, namely:

• The sale of the assets of the business (such as stock, plant, fixtures and fittings, debtors, etc.).
• The sale of the company’s shares (where usually all assets and most liabilities of the company are transferred).I

n the first case you would be valuing assets only (which could include or exclude valuing the goodwill component separately); in the second case you would be valuing a business in total (i.e. the net value of all the assets and liabilities, including any goodwill value, if appropriate).

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