Experts present at the recent CompexAfrica business exit forum have advised entrepreneurs on different ways they can exit their businesses and how they can carry out business valuation on what they want to sell or buy.
The CompexAfrica platform, which has over 90 businesses worth several billions of naira listed on it for sale, brought together some business buyers and sellers on a single platform recently.
One of the experts, who is a director from Ernst & Young, Damilola Aloba, shared his experiences on how to prepare a company for sale, and how to value small businesses.
Aloba in his presentation said, “business valuation is an art and not a science. It depends largely on the aims and objectives of either the buyer or seller at a particular point in time.”
The three fundamental approaches to business valuation, according to him, are Asset-approach, Market-approach and Income-approach. He further demonstrated how intrinsic and relative valuations can be used.
In intrinsic, the value of an asset is estimated based upon the business cash flow, growth potential and risk. While in relative valuing, assets are valued by looking at what the market prices of similar assets are. That is, what is the comparable or similar price of such asset, and standardised price.
On legal and intangible asset valuation, Partner, Astute & Young, Ikechukwu Ubahakwe, advised entrepreneurs to ensure they engage experts if they want to buy or sell a business. He emphasised the need to carefully examine the existing legal agreement to know if the seller has the right to sell and to whom they can sell to.
Executive Vice Chairman, Signal Alliance, Collins Onuegbu, wants entrepreneurs, who plan to sell, to have a clear-cut objective for their decision, then prepare their business for partial or full sale by ensuring that a 3-year account statement, and a business plan are in place.
CompexAfrica is a business exit platform portal that has created the first online market place – www.compexafrica.com to facilitate the buying and selling of businesses and companies in Nigeria and across Africa. The company received seed money and incubation from Sasware, the technology investment subsidiary of Signal Alliance.