What is a Business Value Assessment?
A Business Value Assessment is conducted to provide an estimate of the business' value based on its current financial performance.
Other key factors are also taken into account such as the workforce and capacity of human resources, location and quality of the equipment and premises, the brand identity, existence of client records and repeat client as well as inherent risks and factors within the industry or profession.
A Business Value Assessment maybe useful in the following situations:
- Planning to prepare a business for sale.
- Succession planning including entry and exit of equity holders in the business.
- Planning to acquire a new business.
- Assessment of lending capability.
If you are planning to retire or sell your share of a business the assessment will present the following information:
- Provides a seller with a realistic appraisal of the value of the business.
- Enables a seller to plan for their financial future.
- Provides insight into how to improve the value of the business prior to sale.
- Informs seller of the best potential strategies for sale and value realisation.
If you are planning on purchasing a business the assessment will present the following information:
- Provides a purchaser with a value on which to appraise the business viability of the purchase.
- Provides a purchaser with a platform for negotiation of the purchase price.
- Demonstrates the value of the transaction.
- Demonstrates due diligence to the financier and substantiates the expected financial performance when seeking finance.
- Provides a basis for calculating the expected return on investment.
- Allows business cashflows to be projected inclusive of purchase financing obligations.
If you are a financier the assessment will prepare the following:
- Provides a professional assessment of the transaction dynamics and financial implications.
The business valuation assessment will involve the following steps:
- Review of the practice's financial records over the past 3 years and any interim financial data,
- Review of staffing profiles,
- Commentary on performance,
- Analysis of financial performance, and
- Projection of financial outcomes - including finance requirements and tax obligations.
* A Business Value Assessment complies with required standards appropriate to their purpose.
Your investment in a Business Value Assessment will be advised once the full scope of work has been determined.
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