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VALUING YOUR Issue 8 | 201121seller. Firstly there is no time pressure and these discussions, which are disruptive to the smooth running of the business, can go on for many months without any tangible progress. More importantly there is no incentive for the potential purchaser to offer a competitive price because there is no competition from other potential purchasers.Getting the highest priceA formal sale process solves both of these problems. Although purchasers don't like a competitive bidding situation this is a normal part of the acquisition process. In a one-to-one discussion the purchaser can offer a low price knowing that, if it is rejected, they can come back with a higher offer. In a competitive situation there is no such guarantee and therefore offers are usually much higher. A timetabled process also keeps everyone focused and minimises the time spent in initial discussion. If you are selling 100 per cent of your business then it is simply a matter of who offers the highest price. Increasingly in emerging markets, sellers are looking for an international partner and are selling a majority stake - usually between 60 and 75 per cent with the rest to be sold at a later date. This requires a much more strategic approach as it is not just about the money today but the value of the remaining shares in three or fi ve years. With a partial sale it is more important to research your potential partner and to assess how much value they can add to the business. The best partner may not be the one who offers the most money up front but the one who can maximise the growth. In summary, multiples are generally increasing and are currently in the range of six to eight times EBIT, with particularly strong businesses or exhibitions in fast growth sectors such as energy achieving a little more than this. Where an individual business sits within this range depends on the factors outlined above. With a careful review of your business, a systematised approach to selling and realistic price expectations a seller can achieve a good price. This is not a one-way process. The most successful deals are always those where both parties are happy with the eventual outcome. The value of a business is normally expressed as a multiple of Earnings Before Interest and Tax (EBIT). There are many factors that affect what the multiple will be and here are the main ones.. The sector - Shows in different sectors attract different multiples depending on that sector's growth potential. . The size of the business - Although acquiring a business with critical mass was a lot more important to purchasers a few years ago most are prepared to pay a higher price for size. . The country of operation - Brazil is experiencing high multiples due to strong competition for a limited number of opportunities.. Portfolio risk - A single show is likely to be valued at a lower multiple than a portfolio of events because of the higher risk. . Portfolio mix - Print products are much harder to sell than exhibitions and, because of declining revenues, they attract lower multiples. . Maturity and growth attributes - The fact that your exhibition has been running for 25 years is not usually a strong selling point. FACTORS AFFECTING VALUATION