Business Valuations based on ‘Market Value’ need Market Evidence

“The use of market-based inputs should be maximised” (IVS 2017) in business valuations. Reconciling business information against market evidence is essential if a realistic assessment of business value is to be determined. It brings ‘practical reality’ to the valuation work in our view and ensures compliance with the Standards governing the report.

You Will Find ‘Armchair’ Business Valuations ‘Don’t Cut the Mustard’.

It has long amazed me that people are happy to accept business valuations that are done from the isolation of a desk and from never seeing the physical business.

Your Choice of Report Determines Its Usefulness.

Opinions of the value of a business can extend from a chat amongst friends, colleagues or advisers through to a detailed investigation and analysis of the business’ physical nature, financial records, market evidence and the application of widely recognised and applied techniques.

Get Valuation Standards Agreed to Before Work Starts

Just about everyone has a differing view on the value of a small business. And just about everyone has a different way of forming that view. There can be as much argument about the way a small business is valued as that of the view or opinion formed itself.

Business Valuation – Purpose is Important

Business valuations are usually sought for decisions to be made. The decisions usually will change to financial positions of those associated with the business concerned. Decisions could relate to anyone of a number of issues:

IVS Mandate Economic and Industry Factors Must Be Investigated

Traditionally, financial information has been seen as the primary source of information to value businesses.

Valuations: Where Experience Independence & Intent becomes the Deciding Issue.

Where Accounting Qualifications cannot replace the skills, experience and qualifications of a Registered Business Valuer.

Business Value – Improve It by Reducing Risks to Profits – Part 8 by Graham Long

Management of the business operation can be where risks to future profits can be significant. It can also be where reductions in risk can be the easiest to implement.

Business Value – Improve It by Reducing Risks to Profits – Part 7 by Graham Long

Competition, like supply, covers a broad range of topics that may be not be immediately obvious. Competition from other businesses may be a negative. But, competition across a range of suppliers can be positive in helping to keep costs down and margins up.

Business Value – Improve It by Reducing Risks to Profits – Part 6 by Graham Long

Risks – Supply, Stock and Work In Progress