Local brokers - Local knowledge

What is a Business Valuation?

A common question for most business owners or people looking to get a Business Valuation is why use a Business Valuer when they can get a valuation from their Accountant. With all respect to the many highly trained and qualified Accountants in Australia, the simple fact is they just don’t know the market.

A business valuation will take into consideration previous sales history or similar business where the information is readily available. As business brokers along with being business valuers, the team at WA Business Sales & Valuations have in-depth knowledge of the current market conditions and demand for certain businesses. This can also be a huge benefit if you are looking to improve the saleability of your business.

We specialise in Business Valuations for:

  • Partnership Settlements
  • Divorce / Marriage seperation
  • Asset Restructure
  • Pre-Sale Valuations

 

Business Valuation vs. Business Appraisal

You may be thinking what is the difference between an appraisal of my business value from a local broker and a formal business valuation. The difference is a substantial one and it ultimately comes down to what you are looking to achieve?

If you just want to know what your business is possibly worth in the current market then any good, experienced broker should be able to tell you this. Generally you will be given a price range estimate as the market conditions can sometimes vary. You will find this may be free of charge for a simplistic look to a more detailed appraisal which may cost up to $1,000. These costs are often refunded if you eventually list your business with that broker.

In certain circumstances, whereby you need a valuation to show detailed workings and understandings of your business for the process of any of the above the it is likely you will require a formal business valuation. All of our valuations are insured and prepared to International Valuations Standards, and as such will be suitable for most purposes (with the exception of bank lending). Given the attention to detail in a formal valuation, which may be anywhere from 8 pages up to 50 or 60 pages in total size you will be looking at a cost of anywhere between $3,500 and $12,000. 

 

Is it worth the cost?

Ultimately this depends on the purpose. In most cases the answer is yes given a valuation can be a great starting point for improving the overall valuation of your business. In addition to the current value, a Valuation provides you with a qualified outsiders holistic view of the business which can help you to understand:

  • How to prepare your business for sale to maximise the value (sometimes adding hundreds of thousands onto the price).
  • How to improve the overall profitability of the business.
  • How do I compare against other businesses in my industry.

Even the cost of an average valuation is likely to provide a return many times over!

 

The difference between my Accountant and a Registered Business Valuer?

This is the most common question business owners will ask themselves. Accountants are highly trained professionals and provide excellent advice around accounting structures, taxation advice and general business advice where required. Most accountants are also qualified to provide business valuations as part of their accounting qualification. These types of valuations can be very number orientated and look purely at the financial aspects of the business to determine the value. In our experience the financial aspects of the business only make up around 30-40% of the valuation process and it is the non-financial aspects that are more important in determining value.

The other big difference (and probably the most important is the in depth knowledge of the market (including access to market sales evidence where applicable) that only a Business Broker / Registered Valuer can access. 

As a Registered Business Valuer, and Licensed Business Broker we have all the necessary market knowledge and market evidence that is required to make sure all our valuations are can be tried and tested.

 

The next steps...

If you are in need of a formal Business Valuation, or just want to have a confidential discussion on the next steps and process please feel free to contact Reece O'Sullivan on 0419 198 584 or reece@wabusinesssales.com.au

 

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