You may require a business valuation report for the following reason(s):
- buying a business
- selling a Business
- family matters (including divorce and family settlements)
- litigation
- required by the solicitor
- required by the shareholders
- partnership dissolution
- work out capital gain tax component
- work out goodwill
- stamp duty
- business planning
- others
Being a professional business valuer, we feel that each business operates differently; they may belong to the same industry but running it differently. Each business has its own culture, clientele, suppliers and management style. There is no fixed method to value a business: each business has its own merits and benchmark. Several methods, factors need to be considered to value a business.
We may use one or a combination of the following methods or may add a few more methods to appraise a business:
- Based on sales
- Profit based valuation
- Asset based valuation
- Industry Benchmark
- Rule of thumb
- Comparable Sales method
- Capitalization of Future Maintainable Earnings (CFME)
- Calculating a business net worth
- Based on the business’s income or profits and the expected return on investment (ROI)
- Earning multiple
- Calculation of net assets on a going-concern basis.
Besides the above we will consider the factors such as:
- Age of the business
- Product
- IP (intellectual property) /brand, Social Media reviews
- Industry
- Customers (database)
- Suppliers
- Rent & Lease: Outgoings (included Body Corporation, Promotion and advertising expenses), Rates and business operating expenses.
- Staff wages and KPI, Owner wages (drawings) and their participation/hours in the business.
- Staff and Management skills.
- Business Assets i.e. Chattels / Equipment (owned) and worth of Intellectual properties.
- Business set up costs and fixtures.
- Business location, facelift, papulation, traffic, crossing main roads, Parking and distance from the Big Brands Stores / Retailers.
- License (s), Registrations and approvals (included: council, liquor etc.)
- Health and safety compliance.
- Seating Capacity (approved)
- Financials (Section 52), Profit and Loss and Balance Sheet and Cash Flow Projection) and Business Tax returns.
- Whether the Business will be sold as Going concern or GST applicable.
- If a business is a franchise, the franchise code of conduct, franchise agreement terms, renewal and expiry etc., targets and compliance.
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