Buying or selling a business can be one of the biggest decisions you’ll ever make. It doesn’t matter if you’re the business owner or the prospective buyer, getting a professional assessment of value is vital.
There are also many other reasons for seeking a valuation of business. You might need one for insurance purposes or when planning for succession. Valuations may also be required for taxation requirements (capital gains tax concessions or ATO disputes), liquidations or going concerns.
There are many questions that need to be asked before a valuation can be conducted. The answers can greatly influence a business’ value.
When selling a business, these include:
- Who are you likely to sell to? Family or third parties?
- Are you selling all or part of the business?
- What makes the business attractive to buyers?
- Does the business offer a strategic advantage to buyers?
- Is the business on an upward growth trend towards maximising its value?
- Does the business have consistent, reliable earnings?
- Is the business dependent on you? Or can you leave with minimal impact?
- Are systems and processes documented?
- Are key personnel committed to the business?
When buying a business, these include:
- Why do you want the business – for lifestyle, future wealth or strategic reasons?
- What are you buying – intellectual property, market share, operational efficiencies or new market opportunities?
- Is the intellectual property protected?
- Is the business ready for you to take over or is there work to do to get it into shape?
- Are there any key personnel that need to be locked into the sale process?
- What are the risks inherent with this business? Can you manage them?
- Are the any outstanding legal issues you need to be aware of?
- Are the structures, processes and procedures documented and in place?
- Does the existing workforce have the capability needed to run the business successfully?
Whatever your reason, BDO can assist you with the right valuation approach tailored to your unique needs. Contact a BDO adviser today.