How to Value a Business
In order to determine a business’s value, our business valuers in Canberra must investigate, analyse, and interpret a range of variables in relation to the business and the local economy. This is completed by using a range of alternative methodologies and formulas to accurately ascertain a business’s fair market value while ensuring complete objectivity and transparency.
The alternative methodologies used by our business valuers will depend on the business type and valuation requirements. These include:
Capitalisation of Future Maintainable Earnings
This methodology will focus on the business’s historical financial statements and apply a weighting method to anticipate future earnings to gain a perspective on the current fair market value. This methodology will use industry sourced multiples and taxation benchmarks to calculate the business’s performance against industry standards.
Our business valuers will use these formulas to strip away any inconsistent variables and weigh business earnings against market performance. Using their extensive background and skillset, we will then be able to ascertain the accurate market value. As such, this methodology can be used for a broad number of purposes and business types.
Net Asset Approach
This approach will only focus on the business’s assets in terms of value. We will research all the business’s tangible and intangible assets and value them against any financial liabilities of the business. This methodology is usually saved if the business is closing down or unlikely to turn a profit. As such, our business valuers will only focus on the remaining assets as the last remaining source of value.
The Discounted Cashflow Methodology
This methodology will focus on the cash flow statements of projected earnings of the business to calculate value. This methodology is saved for larger corporations who have the capacity to track this information. As such, our business valuers will use these statements and weigh these against anticipated economic risk factors.
If you require a business valuation or would like more information on how we determine the value of a business, reach out to one of our team members on (02) 5104 0811. Alternatively, you can check our frequently asked questions or complete an online enquiry form and we will get back to you shortly.