Business Valuations and Appraisals

“These days everything is costed, and nothing is valued.” Anon.

When you buy an asset there will be an asking price. You need to ascertain what it is exactly, that you are buying, and what those assets are worth.

Sometimes, when the business is small, a business appraisal will suffice, rather than a full valuation. However where there are substantial assets and a significant business involved, a valuation should always be done.

There is now an Accounting Standard (APES 225) that sets-out what must be done in the event of a valuation, and how the report must be set-out.

When you sell an asset(s) you need to plan this process, and valuing the business is a part of this process.There are also Accounting Standards around the valuation of financial instruments held by reporting entities per IFRS.

Business Succession Planning

Maybe you know already exactly who will succeed you in your business when you step back towards retirement. If not, this planning process, to identify who is the natural buyer of your business, will take time, patience and understanding.

Some buyers may include:- 

Trade Sale to a competitor,
Management Buy-Out,
Family member(s),
Aggregation of a few like-styled firms with access to Business Angels and/or Venture Capital, towards an IPO in five(5) years time,

Wills and Estate Planning

This process should be held in a meeting with your accountant, solicitor and financial planner to ensure a rounded discussion on the issues. 

Estate Planning is ensuring that the correct assets arrive in the safe-keeping of the selected person, with the least amount of fuss.

Wills should be looked at every three (3) to five (5) years as a minimum, with your solicitor.

Sale of a Business

All business has a value.

Value and Price rarely match, because of emotion.

If you want to sell a business, and maximise value/price, you must plan this process to ensure an optimum price; and it may take upwards of three (3) years to make the business ‘sale-ready’, because decisions made today take a while to flow through to the figures.

A business with less than three(3) years trading figures may be considered to have no ‘implied goodwill’ in their value; but nevertheless there will be a value above assets, if it is the sale of a going concern.

Consequently an intending buyer will want at least three (3) and preferably five (5) years trading figures and data.

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