This can happen to you. And it happens far too often.
A business is valued by a business valuer familiar with business sales and experience in writing business valuations reports that comply with Governing Standards and are fit for purpose.
The business valuer undertook a thorough independent investigation into:
- Its physical nature and environment;
- Its financial Report and associated documents;
- The business sales market places for evidence of sales and sold results;
- Valuation approaches and methods to consider the most suitable to apply to the information available.
Thereafter, a sound, logical conclusion on the value of the business was reached in a formal Valuation Report.
Now, enter the other ‘business valuer’.
The original Report was selectively ‘cherry picked’ for details. There was no investigation whatsoever. Then an ‘unknown’ method was applied to ‘cherry picked’ information. It ‘calculated’ a value that was well beyond the ‘outer limits’ of reality.
So, the ‘business valuer’ was paid to produce a ‘Valuation Report’ that, in my view, was little more than a ‘sham’. The end result was the original Report prevailed and the Client loss money.
The Lesson:
Anyone can apply any ‘mathematical formula’ to calculate the value of a business.
But:
- Does it represent reality?
- Is it fit for purpose?
- Does it comply with accepted Governing Standards?
Be aware there are four ‘tests’ that can apply to business valuation approaches and methods.
- Has it been tested and accepted by the Courts of Law?
- Is it accepted by the Industry concerned?
- Is it accepted by financial institutions for lending purposes?
- Is it in an approved Textbook used by Internationally recognised Educational Institutions?
Choose your Business Valuer carefully before you make a costly mistake.
If you need more information, talk to us.
Negotia Group
1300 551 757
info@negotia.com.au
Disclaimer: The views expressed in this article are those of the Writer. The information is not meant to be exhaustive. Readers are responsible for making their own inquiries and assessments as to the truth and accuracy of all the information given and should seek advice from professionals. No liability (in contract, tort or otherwise) will be accepted for any loss or damage incurred as a result of reliance upon any material contained in this publication or any information or advice provided in this publication or incorporated in it.
Kevin Lovewell
M: 0401 308 385
P: 1300 551 757
E: Click here to contact Kevin Lovewell
Member & Registered Business Valuer
Australian Institute of Business Brokers
Jessica Holbrook
P: 1300 551 757
E: Click here to contact Negotia Group
Business Analyst
