Your business is worth what anyone is prepared to pay for it, according to PricewaterhouseCoopers partner Malcolm Preston.
Preston said: “The question I am most frequently asked is ‘What is my business worth?’ It’s all down to the buyer.”
Preston noted everyone always points to Airtours’ purchase of Direct Holidays for a staggering £80m when the direct-sell operator was only turning a profit of £1.5m.
He added: “But you have to understand why so much money was paid for it. Airtours was going into a new market which would have taken a few years to build up if they had launched their own direct-sell operation.”
Other major operators were also interested in acquiring Direct, which helped increase the sale price.