Business Valuation

Are you dealing with Unmanaged Risk?

In our experience it is unmanaged risk that most often makes a potential buyer walk away. It’s these same risks that probably keep you up at night. The good news is there’s no risk we haven’t seen before and nothing that can’t be resolved.

Gaps might include;

Reliance on key personnel

A mismatch in management

Unsystematised work processes

Lack of documentation

Expensive revenue

Underinsurance

Poor technology

Sick finances

Dealing with these risks is straightforward if you have the right step-by-step process. Rather than do it alone, we are here to identify and mitigate any potential threats to your sellability.

Benefits Of Our Service

Easy

Our unique process is designed to provide you with an accurate assessment of your business performance and value, while not significantly affecting your day-to-day operations in the process.

Thorough

We will examine not only the financial aspects of the business, but also the non-financial/operational issues and the personal goals of the business owner.

Tailored

We will design a valuation model to accurately assess the business and outline the best way to address key issues including tax planning, risk management and your business’ succession and exit readiness.

Business Valuation Report

For a more thorough and formal assessment of business value we conduct “reverse due diligence”. This involves a thorough analysis of your business from a buyer’s perspective over 4-6 weeks, identifying gaps that may prevent you from maximising your return.

You will receive;

A Comprehensive and clear 65-page report
Clarity on how you stack up against industry benchmarks
Recommendations on what to address
3-hour workshop to identify priorities

We will work with you to limit any impact on staff during the review so business can continue as usual.

Arranging a valuation is both easy and a great investment. It gives you peace of mind as well as a clear plan outlining what you should do to maximise your business now and in the long term.

Let’s Get Started

Book an obligation-free 30 minute appointment with a Succession Plus adviser to see how a Business Valuation can benefit your business. Get in touch today.

Frequently Asked Questions on Business Valuation

What is a business valuation?
- A business valuation should provide the value of the equity (shares) in your business and is based on a combination of risk and return (profits). Typically, it is calculated based on several years of financial statements and should remove abnormal expenses.
How do you value a business?
- Valuing a business includes an assessment of both risk and return. The risk could be a combination of industry risk, economic risk and risks related directly to the individual business while the return is normally profit or earnings of the business.
What business valuation method should I use – EBITDA or NOPAT?
- NOPAT is what we use in all our reports and valuations. The key is in the name: Net Operating Profit After Tax. ‘Net’ as in after everything is included, while EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) excludes a lot of key items.
When should I get a business valuation?
- A business valuation is a good place to start before you make any kind of decision around strategic planning, succession or exit. It may also be needed as a result of a tax restructure a shareholder or partnership dispute or even a legal case including family law and estate planning.
Should I get a business valuation before I sell my business?
- You should always get a business valuation before you decide to sell the business. Most business owners are not aware of the actual valuation, thus a business adviser will not be informed to decide what could be done to improve the valuation and achieve a higher selling price.
How can I prepare for a business valuation?
- Preparing a valuation will require at least three years of financial statements and tax returns. It will also require a detailed assessment of the operational aspects of the business which lead to risk this is normally done through an interview with the owners. The valuer may also want to examine other documents relating to the business.
What is included in a business valuation?
- Business valuation should not just be a monetary value ($$), it should also include the key valuation drivers and assessment of the risk. Also, a valuation should ideally provide recommendations and a project plan to improve the value over time.
How long does a business valuation take?
- Proper business valuation should take between two and three weeks once all the information is provided, as the analyst will be required to adjust financials to normalise the profit as well as assessing many operational aspects within the business to determine overall risk.
What is the difference between a business valuation and a business appraisal?
- Similarly to Real Estate, a business appraisal is simply an estimate, it cannot be relied upon or used by the IRD or the courts. A business valuation, on the other hand, is a formal document prepared by a qualified valuer after detailed analysis and should be far more accurate.
What is goodwill?
- Goodwill is an intangible asset that often makes up a large part of the valuation of a business. It is a combination of business performance, customer relationships, supply contracts, intellectual property (including patents and trademarks), employees and brand or reputation.
How do you calculate goodwill in a business?
- Goodwill is most commonly calculated based on a multiple of profits and should represent the value to an investor or buyer of those profits going forward. This means it needs to factor in the reliability (or risk) of those profits in the future.