Business Valuations

Do you need to know how much a business is worth in todays market?

Business Valuations are an integral part of the specialised services that ABA Chartered Accountants (ABA) offers.

We have a reputation for preparing quality business valuations for small to medium sized businesses across many industries. We can, if necessary, support our valuation work in Court and other dispute resolution forums.

Business valuations are often required by business owners for many purposes, including but not limited to:

Purchase or sale of businesses or shares.
Mergers or amalgamations.
Transfer of interests between shareholders or into a new entity.
Divorce proceedings.
Shareholder or partner disputes.
Relationship property matters.
Restructuring finance.
Due diligence.
Investment review.
Calculation of estates upon death.
Loss of earnings claims/business interruption compensation.
Succession planning.

How do you work out the value of a business?

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This is a common question and is much more than just a numbers game.

It is more of an art than a science and requires assessment of the industry, knowing the risk rating of the industry, as well as having a commercial understanding of the business.

The business (or share) value may consists of a variety of elements, some of which you can see below;

1

Working capital, including:

Bank
Debtors
Creditors

2

Tangible assets

Real estate
Machinery, plant and equipment
Furniture and fittings

3

Intangible assets

Goodwill
Customer lists
Trademarks and copyrights
Distribution rights
A superior management team
Non-complete agreements
Physical location
Special processes
Brand recognition

Quite often the value of a company’s intangible assets is greater than the tangible assets.

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Valuing intangible assets requires a careful analysis of many aspects of a business enterprise.

To value intangible assets the following must be considered:

Management capabilities
Company strengths, weaknesses and vulnerabilities
The competitive environment
Overall expectations for the marketplace
Economic prospects for the industry

Business valuations that look at all of the above factors will consider the risk of an ownership interest and of course risk affects value. These factors are essential to consider when transferring your business into a trust, transferring shares between partners, or the ultimate of setting a price for the sale of your business.

ABA have relevant expertise and resources to incorporate all of these facets into a well-documented business or share valuation.

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