JPAbusiness

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?

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.

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.”