While addressing the attendants to the Complex Africa Business Exit Forum, Damilola Aloba, the Associate Director, Transaction Advisory Services at Ernst & Young spoke on ‘Preparing your Business for Sale’. He had the following to share:
A business valuation largely depends on the aims and objectives of either the buyer or seller at the specific given time. Aloba states that the three fundamental approaches to valuing a business are:
Aloba went further to demonstrate how a business worth can be arrived at from an intrinsic and relative valuation methods. Stating that:
A business Intrinsic Value: This is a business’s asset worth that is estimated basing on its cash flow, its inherent risks, and its potential for growth.
A business Relative Value: This is the value of the business based on comparison with market prices of similar businesses in the industry. By comparing a business’s asset prices to that of comparable businesses’ assets worth using a standardized price.
As for the legality aspects of a business valuation and the valuation of intangible assets, one Ikechukwu Ubahakwa a Partner, Astute & Young, told the attendees to follow due diligence and sort professional services of experts. That is when they are either buying or selling a business.
Ubahakwa stressed on the need for people being careful when examining the legal agreement. Especially to find out if the seller has the legal right to sell and whom they can sell the business to.
Collins Onuegbu, the Executive Vice Chairman of Signal Alliance, cautioned entrepreneurs thinking of selling their business to have a clear-cut objective for such a move. After which, they should prepare the business for a partial or full-scale takeover. They should also prepare a full accounts statement for at least the past three years alongside a business plan.
It is an online marketplace where buyers and sellers of businesses and companies across Nigeria can interact. Already, there are over 90 business worth over several billion nairas listed on the platform.
The Complex Africa Business Exit Forum was held at the Landmark Center, Victoria Island, Lagos on Dec 9th, 2016. The purpose of the forum was organized to discuss and share pro tips on the industry’s best practice on business exits, buying, and selling.