Business valuation is not an exact science and nor is it a simple science. However there are some factors you should always consider when assessing a business’ value.
The following video lists 3 key factors to consider when valuing a business and 3 questions you need to ask to uncover this important information.
Topics: Business Value, Advice, BME, Video, business advice, Business valuation, Business advisor, Business maintainable earnings, Parramatta, Orange NSW
When business owners come to see us, wanting to sell their business, we often get involved in providing ‘vendor due diligence’.
This basically involves us 'pretending' we're a buyer and has two main components:
1. Understanding what the business is really worth i.e. conducting an independent valuation or market appraisal
2. Understanding how the business appears to a potential purchaser.
That second component is the core part of vendor due diligence and involves looking at the business from a purchaser’s point of view:
Topics: Selling your business, infographic, selling a business, Business valuation, vendor due diligence, business valuer
When determining what a small to mid-sized business is worth, Business Maintainable Earnings (BME) is one of the key concepts the market will consider.
BME reflects the ability of a business to generate earnings into the future.
Remember, as a buyer you don’t want to pay for opportunity you will create in the future; unless there is a strategic element to the purchase, ideally you only want to pay for what has been built up by the vendor.
Topics: Business Value, Buying a business, infographic, business advice, Business valuation, Business advisor, Business maintainable earnings, James Price, Parramatta, Orange NSW
Clients often ask us whether they need a valuation or a market appraisal.
The answer has a lot to do with the ultimate purpose of the valuation or market appraisal. For example:
Topics: infographic, Business valuation, business management, market appraisal, business valuer
The simple answer is ‘no’, you don’t need a valuation to sell a business.
However, in terms of engaging JPAbusiness to sell your business, the answer is ‘yes’: we always recommend clients have their businesses independently and professionally valued before they invest time and money in a sale process.
In this week's video I explain how our first experience of helping a client sell their business – combined with our many years of subsequent experience – has shaped this philosophy regarding valuation and its role in a successful sale process.
Topics: Video, business advice, selling a business, Business valuation, Parramatta, Orange NSW
When it comes to valuing businesses – listed or private – you will often hear people refer to ‘rules of thumb’.
Some will say the value of a business is:
These ‘rules of thumb’ tend to be industry based i.e. “a business in Industry A is worth ‘x’ times multiple of earnings” while “a business in Industry B is worth ‘x’ times revenue”. (I won’t repeat the actual ‘rules’ I’ve heard – I don’t want to encourage anyone to use them!)
In this week's video I provide a practical example which illustrates why relying on rules of thumb is too simplistic when valuing complex businesses.
Topics: Business Value, Video, business advice, Business valuation, Business advisor, business valuer, JPAbusiness, Parramatta, Orange NSW
We have helped some clients find the right business within six months while, for other clients, it has taken over three years.
The key phrase is ‘the right business’; I’m sure we could speed up the process if our aim was just to help our clients buy ‘a’ business, but that’s not our job.
In this video I explain why it's important not to rush into buying a business, and share four tips for managing risk during the business buying process.
Topics: Buying a business, Video, business advice, Business valuation, Business advisor, vendor due diligence, Parramatta, Orange NSW
Business valuation is not an exact science and nor is it a simple science. However there are some factors that should always be considered when assessing a business’ value.
They are:
We've created the following infographic to help you get started on assessing the value of a potential purchase opportunity.
Topics: Business Value, Free download, Advice, Valuations, infographic, Business valuation, Parramatta, Orange NSW
When advising clients looking to buy businesses, as well as running businesses, we use a number of different methodologies to assess value.
A business is a dynamic entity – a ‘going concern’ – so you can’t just value it at a point in time. You need to assess the level of cash flow it is generating today, and what you can expect it to generate into the future. You then need to assign a ‘present day value’ to those potential future cash flows.
One way we do this is by using the discounted cash flow (DCF) valuation method.
Topics: business advice, Business valuation, valuing a business, business basics, Parramatta, Orange NSW, discounted cash flow
Selling a business should not be like exploring an uncharted continent.
When embarking on a business sale you’re not just taking yourself, but you must also bring along your business partners, staff and advisors for the journey. It’s a massive undertaking and not one to be entered into lightly.
Don’t go exploring on a business sale unless you at least know where you want to end up.
This week's infographic is for those just setting out on the business sale journey, and step 1 is about being honest with yourself regarding why you're on this journey to help you determine where you need to go.
Topics: Selling your business, infographic, selling a business, Business valuation, Business advisor, Business selling, business broker, Parramatta, Orange NSW
