Business valuation or market appraisal – what's the difference? [video]

Posted by James Price | JPAbusiness on 27-Feb-2019 02:00:00

Business market appraisals and valuations are both robust assessments of a business’ worth and are appropriate for use in different circumstances.

In this video I explain the difference between a business market appraisal and a business valuation, and when each should be used.

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Topics: Business Value, Advice, Valuations, Video, Business valuation, market appraisal, valuing a business, Parramatta, Orange NSW

How to use our Buying a Business Planning Sheet [template]

Posted by James Price | JPAbusiness on 13-Feb-2019 02:00:00

There are plenty of good businesses out there, but the key to a successful business purchase is finding a business that will be ‘good’ for you.

Our Buying a Business Planning Sheet is designed to help you find a business that is the right fit for your requirements and risk profile.

When assessing different businesses, the planning sheet prompts you to consider 15 questions, including:

  • Why will you succeed in this business?
  • How does the asking price compare to a market appraisal of recent sales and market trends?
  • Do you fully understand the requirements of the lease relating to your potential business purchase?

If you are considering buying a business, download the free template and work through the questions as a way of bringing some rigour and structure to your preliminary planning.

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Topics: Buying a business, Template, business advice, Business valuation, valuing a business

When should I have my business valued?

Posted by James Price | JPAbusiness on 16-Jan-2019 02:00:00

People typically request a valuation of their business in reaction to an event, for example:

  • they’ve decided they want to sell or exit, so they want to know how much the business is worth;
  • they want to restructure the legal entities in the business and need a valuation for tax and/or statutory purposes;
  • there is a relationship breakdown between joint shareholders or spouses and they need to transfer or split the business so one can sell to the other, so they need to know its value;
  • they’re seeking finance and the finance company or bank has requested a valuation of the business.

Those are event-orientated valuation requirements and we certainly offer that service on a regular basis.

However, we also advocate using valuation as a proactive management and investment tool and we’ve been very excited to provide this service to more and more business owners over the past 12 months.

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Topics: business advice, Business valuation, Business advisor, business management, budgeting, valuing a business

What are some 'rules of thumb' for valuing businesses?

Posted by James Price | JPAbusiness on 12-Dec-2018 02:00:00

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:

  • ‘x times its revenue’ or
  • ‘x multiples of its earnings’ or
  • ‘a function of its after-tax profit’ or
  • ‘a function of its gross profit’ and so on.

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!) 

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Topics: Business Value, business advice, Business valuation, Business advisor, business valuer, JPAbusiness

3 questions to ask when valuing a business [video]

Posted by James Price | JPAbusiness on 05-Dec-2018 02:00:00

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.

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Topics: Business Value, Advice, BME, Video, business advice, Business valuation, Business advisor, Business maintainable earnings

How long does it take to buy a business?

Posted by James Price | JPAbusiness on 21-Nov-2018 02:00:00

We provide a range of services to business buying clients, from initial review and feasibility, through to business valuations, a preliminary assessment of the strength of the opportunity, full due diligence services if the party has lodged a non-binding offer and is seriously interested in the business, through to merger and acquisition facilitation services.

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.

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Topics: Buying a business, business advice, Business valuation, Business advisor, vendor due diligence

Do I need a valuation or a market appraisal? [infographic]

Posted by James Price | JPAbusiness on 31-Oct-2018 02:00:00

We are often asked by clients 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:

  • Does the valuation/appraisal need to stand up in a court of law?
  • Will the valuation/appraisal form part of a transaction/settlement process?
  • Is the client seeking an indicative view of a business' fair market value and the likely factors that add to and detract from that value?

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Topics: infographic, Business valuation, business management, market appraisal, business valuer

Why business sellers should do vendor due diligence

Posted by James Price | JPAbusiness on 22-Aug-2018 02:00:00

When business owners come to see us, wanting to sell their business, we often get involved in providing what we term ‘vendor due diligence’.

Vendor due diligence has two main components:

1. Understanding what my business is really worth

This is something we have covered previously in eBooks and blogs about business valuation and market appraisals.
It involves getting independent advice on what your business is really worth in the market, on a realistic, fair value market basis.

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Topics: Selling your business, selling a business, Business valuation, vendor due diligence, business valuer

What is 'multiple of earnings'?

Posted by James Price | JPAbusiness on 15-Aug-2018 02:00:00

Business purchasers want to know: If I buy a business today, how long will it take me to get my money back? 

Remember, the purchaser doesn’t want to pay for opportunity that they create in the future. They only want to pay for what has been built up by the vendor.

In the small- to medium-sized business market, purchasers are generally looking from one, to four and a half years, to recover the money they’ve invested.

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Topics: Valuations, business advice, Business valuation, Business advisor

 
Disclaimer: The information contained in this blog is general in nature and should not be taken as personal, professional advice. Readers should make their own inquiries and obtain independent, professional advice before making any decisions, taking any action or relying on any information in this blog. 
 
 

 

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