How can a broker add value when selling a business?

Posted by James Price | JPAbusiness on 26-Jun-2019 02:00:00

You don’t need a broker to sell a business, but having a good broker or experienced advisor to assist you can add value at a number of points along the selling process.

In this blog we’re going to examine four elements of selling a business and show how a good broker can provide additional value at those stages:

  1. Determining what the business is worth
  2. Preparing the business for sale
  3. Describing the business opportunity to prospective purchasers
  4. Progressing the sales process.

We've also included a number of client examples to illustrate how this works in practice.

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Topics: selling a business, Business advisor, business broker, valuing a business, business basics, Parramatta, Orange NSW

What is ‘discounted cash flow’ when valuing a business?

Posted by James Price | JPAbusiness on 08-May-2019 02:00:00

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.

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Topics: business advice, Business valuation, valuing a business, business basics, Parramatta, Orange NSW, discounted cash flow

What should my business be returning for my investment?

Posted by James Price | JPAbusiness on 06-Mar-2019 02:00:00

The business buyers and owners we work with in the SME market tend to target a return on investment in a range from 10 to 40%.

This range is influenced by factors such as:

  • industry prospects
  • competitive dynamics
  • points of difference
  • use of technology
  • delivery capability

...and a myriad of factors relating to the business model and specific enterprise.

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Topics: business advice, valuing a business, business basics, return on investment

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

How to put a price on ‘strategic value’ when buying

Posted by James Price | JPAbusiness on 23-Jan-2019 02:00:00

One way of quantifying a business’ strategic value, at least to some degree, is to consider the ‘buy versus build’ scenario.

Ask yourself: ‘If I was to buy this business, what additional value over and above the fair market value would I get and could I achieve that same value simply by growing my own business?’

Often as business valuers we will determine a fair market value for a client’s business and then, under a separate and subsequent engagement, be involved in selling that business.

In general we find that for every 10 people – businesses or investors – who are interested in purchasing the business, about three of those 10 are already operating in the same market.

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Topics: Business Value, Buying a business, Advice, strategic value, Business advisor, 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

 
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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