Drivers Of Business Valuation

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What are the key drivers of the business valuation? The key factors of the business valuation.

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Drivers Of Business Valuation

  1. 1. DRIVERS BUSINESS VALUATION OF KEY Friday, 5 July 13
  2. 2. Factors Influencing Value Of A Business There are various factors influencing business value but before discussing them, you need to understand that there are various categories of businesses in Australia classified according to their size. The classifications are: - public companies - privately held and family small to medium enterprises - micro businesses Friday, 5 July 13
  3. 3. Profit History Drivers Of Business Valuation The value of a business stems mainly from its profit. Not only current profit but also historical profit. Buyers like to see history of steady growth. History Friday, 5 July 13
  4. 4. Drivers Of Business Valuation The Accuracy Of Bookkeeping And Records All the bookkeeping and financial records of the business need to be accurate and up-to-date. Friday, 5 July 13
  5. 5. Drivers Of Business Valuation Market Demand If the market demand for your business is high then the value of your business goes up. Friday, 5 July 13
  6. 6. Drivers Of Business Valuation Cash Flow Another factor affecting the value of your business is cash flow. Cash flow is the money left in the business over a period and must be distinguished from profit. You can be making good profits but if your clients don't pay their bills, you could be having negative cash flow in the business. Friday, 5 July 13
  7. 7. Drivers Of Business Valuation Strategic Value Strategic value is where a buyer gains more from buying your business than just the profit. The two businesses together create extra value. This could be by virtue of the buyer gaining a key employee from the purchase, securing a key product that it can sell to its database or some other benefit of the transaction. Friday, 5 July 13
  8. 8. Drivers Of Business Valuation Economic Conditions The next factor is the economic conditions generally. The better the economy the higher the price. Friday, 5 July 13
  9. 9. Factors Of Business Valuation The Value Of Assets The next factor influencing the value of business is the value of the assets. See elsewhere on this blog our post on Asset Valuation Method. $$$ Friday, 5 July 13
  10. 10. Factors Of Business Valuation Future Earnings And Profit Potential Just remember that a buyer will value your business according to their belief about the size of next year's income. Friday, 5 July 13
  11. 11. For Advice On Your Business Valuation Or Sale BCI Business Brokers Tony Arena (Managing Director) 3/1 Alexander Street, Crows Nest, NSW, 2065 Phone: +61 2 9439 3399 Mobile: +61 411888148 Email: tarena@bc.com.au www.bc.com.au Friday, 5 July 13
  12. 12. Maximise Business Value For help in maximising your business value take a look at our products here http://bc.com.au/maximise.html Friday, 5 July 13
  13. 13. For A Free Consultation On The Value Of Your Business Visit our website www.valueabusiness.com.au Friday, 5 July 13

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