Do business buyers still pay for goodwill?

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

Goodwill is an intangible value associated with a business and is based on the business' potential to provide a future flow of earnings beyond the current owner. 

Stock, plant and equipment, and other fixed assets, are tangible items that can be relatively easily valued on a market. Goodwill is intangible; essentially it is the risk premium around how and what business maintainable earnings (BME) will be delivered into the future if the business is acquired by someone else and run in basically the same way.

Continue reading...

Topics: Business Value, Selling your business, Advice, Business transfer, Due diligence, Exiting your business, goodwill

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!) 

Continue reading...

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.

Continue reading...

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

Are your customers adding value? [infographic]

Posted by James Price | JPAbusiness on 24-Oct-2018 02:00:00

Many people run successful and efficient businesses, but don’t take the time to sit back and ask: ‘What is actually driving the value in my business?’

Understanding those value drivers and focusing energy on them is the difference between having a business that runs efficiently today, and one that builds value over time.

Customers are key drivers of business value, but – as we know – not all customers are created equal. The following infographic contains 4 questions designed to assist you in assessing the make-up and value of your customer base.

Continue reading...

Topics: Business Value, Customers and Clients, Customers, infographic, business management, small business

How to avoid real estate traps when buying a business [cartoon]

Posted by James Price | JPAbusiness on 17-Oct-2018 02:00:00

Businesses – particularly family businesses – often use real estate assets as part of their wealth generation strategy.

This may lead to situations where the business and real estate assets are interdependent, creating complexities when it comes time to exit and establish a fair market valuation.

Continue reading...

Topics: Business Value, Buying a business, Selling your business, Advice, Valuations, Family business, Starting a business, cartoon

How to use valuation as a management tool [video]

Posted by James Price | JPAbusiness on 03-Oct-2018 02:00:00

Don't wait until someone offers to buy your business to seek a business valuation or market appraisal.

Valuations are extremely useful management tools for business owners looking to maximise their current business performance and long-term value.

A valuation can help you identify what you are currently doing that is adding to your business value, and what you are doing that is detracting from value.

My advice is that, if your business is greater than five years old, you should have it valued on a reasonably regular basis.

Continue reading...

Topics: Business Value, Advice, Valuations, Video, business advice, business management, market appraisal

5 fundamentals of running a business [infographic]

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

There are 5 key business fundamentals a business owner or senior manager needs to grasp in order to run a business for optimum performance.

The following information is a distillation of the things many of our best clients do on any given day of the week, presented here as a simple infographic.

These fundamentals are not necessarily sequential, instead they often overlap and run in parallel, and also inform and interact.

Continue reading...

Topics: Business Value, infographic, business advice, running a business

How valuers assess a business' online presence [infographic]

Posted by James Price | JPAbusiness on 27-Jun-2018 02:00:00

In order to determine a business’s value we assess business health factors, which may include:

  • Financial performance
  • Quality of product or service delivery
  • Point of difference and competitive position
  • Staff culture and performance
  • Physical location and geographic coverage
  • Diversity, size and quality of clients
  • External pressures on business, including industry trends and dynamics
  • Future projections and prospects.

In the past five years, a critical new health factor has been added to that list: ‘Online presence and quality of online interaction’. 

The following infographic illustrates some of the factors we take into account when assessing a business' online position.

Continue reading...

Topics: Business Value, Online, Free download, Running your business, infographic, Business valuation

How can a valuation add value to a business? [video]

Posted by James Price | JPAbusiness on 20-Jun-2018 02:00:00

Business owners often seek a business valuation after being prompted to do so by a 'significant event’, for example:

  • a family break-up
  • retirement
  • need for business restructuring
  • bank lending requirement
  • purchase offer
  • bringing in a new shareholder or partner, and so on.

In this video I explain how valuation can actually be used as an ongoing management tool, adding value while you’re running the business and also potentially boosting value on exit.

Continue reading...

Topics: Business Value, Valuations, Exiting your business, Business advisor, business management, growth strategies

 
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. 
 
 

 

JPAbusiness

Topic

more

Recent Posts