How to value a business [video]

Posted by James Price | JPAbusiness on 22-Dec-2021 06:00:00

People are often critical of business valuation – and sometimes I’m one of them – because it’s a very theoretical process.

In fact, some cynically regard it as hocus-pocus: some science, some gut feel, coupled with a bit of rationale.

It’s true that business valuation is not an exact science, but good valuers base their valuations on empirical evidence and robust assessment, underpinned by regular engagement in the market.

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Topics: Business Value, Video, Business valuation, business valuer

How often should you have your business valued? [video]

Posted by James Price | JPAbusiness on 06-Oct-2021 02:00:00

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:

a) adding to your business value, and

b) detracting from that value.

My advice is that, if your business is greater than five years old, you should have it valued on a reasonably regular basis, say every 2–3 years depending on your growth track and the external environment the business is experiencing.

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Topics: Business Value, Valuations, Video, business management, market appraisal, business valuer

Parramatta new home base for JPAbusiness

Posted by James Price | JPAbusiness on 18-Mar-2020 02:00:00

Last year we told you about our move to Parramatta in Western Sydney. Well, it’s been just over 12 months and we’re loving it!

It’s now time for us to consolidate our physical footprint within one office, which will be the Parramatta office. As a result, we have closed our Orange office, but our corporate address and roots remain firmly in the central west, at Blayney, NSW.

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Topics: business broker, business valuer, Parramatta

Why you need a valuation before starting the business sale process

Posted by James Price | JPAbusiness on 04-Dec-2019 02:00:00

When selling a business, it’s important to think carefullybefore taking it to market – about your reasons and objectives for selling.

Once you’ve established your objective, write it down and/or discuss it explicitly with your business partner, spouse and/or advisor.

You then need to obtain a professional valuation to determine whether a sale could meet that objective.

For example, sometimes we see business owners wanting a certain amount for their business and that amount is not necessarily determined by what the market would likely pay for the business, but rather it’s determined by the amount of outstanding loans the business owner has with the bank.

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Topics: Business Value, Selling your business, selling a business, Business valuation, business valuer

What determines your Business Maintainable Earnings? [infographic]

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

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.

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Topics: Business Value, Buying a business, BME, infographic, Business valuation, Business maintainable earnings, business valuer

Do I have to get a valuation before selling my business? [video]

Posted by James Price | JPAbusiness on 04-Sep-2019 02:00:00

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.

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Topics: Video, selling a business, Business valuation, Business selling, business valuer, sales advice

3 questions to ask when valuing a business [infographic]

Posted by James Price | JPAbusiness on 17-Jul-2019 02:00:00

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:

  • repeatability of current earnings
  • availability of information on the business’ performance and business model
  • point of difference and competitive advantage.

We've created the following infographic to help you get started on assessing the value of a potential purchase opportunity.

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Topics: Business Value, Valuations, infographic, Business valuation, business valuer

How competitive advantage contributes to 'strategic value'

Posted by James Price | JPAbusiness on 22-May-2019 02:00:00

Competitive advantage occurs when you as a business do something better than anyone else and it is hard for other businesses to quickly and easily replicate that offering.

There are degrees of competitive advantage and, in terms of strategic valueyour competitive advantage has to be something a potential purchaser will value.

(Quick reminder: strategic value is the value a purchaser is willing to pay for a business, over and above what an impartial business valuer might determine is 'fair market value'.)

For example, you may say ‘we sell more air conditioners than anyone else because of our unique customer relationship management approach’. That’s great, but are you achieving reasonable margins on those sales? If the answer is ‘no’, there is no value being created, strategic or otherwise.

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Topics: strategic value, business valuer, competitive advantage, business value drivers

How to choose a business valuer

Posted by James Price | JPAbusiness on 09-May-2018 02:00:00

Business owners often come to us and say things like: “I want to sell my business/I’m interested in taking on a new shareholder/I want to get some finance for my business … and I have been advised that my business is worth X.”

My common response is: “We’re happy to help, but on what basis is your business worth X?”

The answer is usually along the lines of: “Oh well, that’s what I was told by my business advisor/financial planner/tax advisor/etc.”

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Topics: Business valuation, market appraisal, business valuer

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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