How to Value Your Business

A Practical Guide for Investor Presentations.

Business valuation is not just a number. It's a subtle instrument that requires a balance between the founder's expectations and the investor's prospects. Your internal valuation is likely based on:

• Significant personal investments and resources

• Current financial performance and turnover

• Deep belief in the project's growth potential and future

However, for an investor, objective metrics, market multiples, and return on investment potential are crucial, not just your perspective.

In negotiations with investors, the valuation question becomes a central point, demanding an artful search for compromise. An overestimated valuation can deter a potential partner, leading them to competitors with more realistic offers. Conversely, an underestimated valuation will result in the loss of a significant portion of future income and a controlling stake that you could have avoided.

A successful deal is the result not only of an arithmetic coincidence of expectations but also a harmonious balance of interests. The investor's share in the company is determined not only by the proportion of their monetary contribution to the overall valuation but also by the parties' willingness to find a "golden mean" that considers the risks, prospects, and strategic goals of each participant in the process.

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