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Business Valuation Checklist


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Things to be consider while valuing your business.
Checklist for your business valuation.

Published in: Business, Economy & Finance
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Business Valuation Checklist

  1. 1. Checklist For Business Valuation1. Know The Purpose Of Valuation:You should know the purpose of valuing your business in the sense that either youare valuing your business for legal purposes, boosting its value, buying it or sellingit.Friday, 21 June 13
  2. 2. Checklist For Business Valuation2. Collect Financial Information:You need to collect the last three years of financial information, including Tax returnof the company, end of directors, Profit and Loss Statements, Balance Sheets andDepreciation Statements.Friday, 21 June 13
  3. 3. Checklist For Business Valuation3. Assets Information:Similarly, collect details of all major assets in use in the business and any valuations ofthe assets and the real estate. Likewise, collect management accounts (Record ofFinancial performance since the last figures), budget and performance to past budgets,any profit/cash flow projections and detail of any contingent liabilities, e.g. legaldisputes, guarantees. Compile any maintenance agreements or lease agreementspertaining to the plant and equipment.Friday, 21 June 13
  4. 4. Checklist For Business Valuation4. Collect Market Information:You should firstly know which market your business is in and then know either thatmarket is growing, steady or shrinking. You also should know your business barriers,competitors, types of customers, suppliers and market share that your business has.Friday, 21 June 13
  5. 5. Checklist For Business Valuation5. Collect Other Commercial Information:Collect any particular licensing or regulatory requirements, e.g. health, safety etc. that isperformed in your business.Friday, 21 June 13
  6. 6. Checklist For Business Valuation6. Analysis The Information Collected:In the assessing the information assembled consideration of the factors affecting value isrequired. These factors include:Profit Margin- Low profit margin reflects higher risk and trends in margins may also be an indication ofthe business life cycle and its future prospects.- High profit margins can reflect the competitive environment in which the businessoperates.Stability- A business with a track record of steady earnings is potentially a more reliable generator offuture income than a start-up business or one with unstable past.Types of income streams- Differentiate between one off transactions e.g. consulting/project business and regularcontinuous streams of income that might come from regular clients.Friday, 21 June 13
  7. 7. Checklist For Business Valuation7. Staff:- Complete a roster of staff including hours worked, skills required, wages, bonuses paidetc.- Any copies of staff contracts.Friday, 21 June 13
  8. 8. Checklist For Business Valuation8. Systems:-Collect operations and training manuals.-Detail systems within the business including software, sales systems.Friday, 21 June 13
  9. 9. Checklist For Business Valuation9. Intellectual Property:Compile a list of intellectual property, including material which is Copyright, Trademarks,Patents and Designs and other intellectual property.Friday, 21 June 13
  10. 10. Checklist For Business Valuation10. Suppliers:Details of any supplier contracts or special arrangements.Friday, 21 June 13
  11. 11. Checklist For Business Valuation11. Clients:Do a quick analysis of your client base noting size of your major clients and the percentageof your sales that they represent.Friday, 21 June 13
  12. 12. Checklist For Business Valuation12. Franchise:- If you are franchise make sure your franchise agreement and disclosure documents areup-to-date.- Make sure any franchise agreement have not lapsed and that all renewals are in processin a timely way.Friday, 21 June 13
  13. 13. Checklist For Business Valuation13. Products and services:Make a list of the products and services that you sell or provide.Friday, 21 June 13
  14. 14. Checklist For Business Valuation14. Information Technology:Make of list of your IT assets including software that you use, accounts you have with cloudbased services and any other IT assets.Friday, 21 June 13
  15. 15. Checklist For Business Valuation15. Competition:List your major competitor and the difference between services and products you provide.Friday, 21 June 13
  16. 16. Checklist For Business Valuation16. Other Information:Collect other pieces of information that might affect business value such as:- Skills required of management and staff- Quality of management- Industry Lifecycle- Reliance on owner operatorFriday, 21 June 13
  17. 17. Checklist For Business Valuation17. Select Appropriate Valuation Method:Once all the above steps are completed. You can choose a appropriate calculation businessvaluation methods from below:- Asset Valuation Method- Market Valuation Method- Rule of Thumb Method- Discounted Cash Flow Method- Future Maintainable Earning MethodFriday, 21 June 13
  18. 18. MaximiseYour BusinessValueFor help in maximisingyour business value take a lookat our product, 21 June 13
  19. 19. For Advice OnYour Buying Your FranchiseBCI Business BrokersTony Arena (Managing Director)3/1 Alexander Street, Crows Nest, NSW, 2065Phone: +61 2 9439 3399Mobile: +61 411888148Email:, 21 June 13
  20. 20. For More Information AboutHow ToValue A Business PleaseVisit Our, 21 June 13