Indicative Valuation of a Business

Sometimes we get asked to make a comment on what we think a business is worth. Often this comes from a person who is thinking they may want to sell, or the person is just inquisitive as to what their business might fetch.

We are happy to give an indicative indication of what we think the business may be worth but we always stress that in the end it is only the market that will determine the price.

We employ a number of methods to give a price that a business might fetch, and it will usually be a range between a lower amount and a higher amount.

Valuations depend on a number of things including:

• Is the business the kind that will appeal to a person who only wants to “buy a job”. In other words there is a reasonable wage the owner can earn but not much more.
• Contrast this to a business that not only rewards its owner with a good market salary, but also generates very healthy profits as well.
• What kind of business is it – is it likely to be sustained and gather momentum for the future or is it a sunset type business with little future growth?
• Is it a business that has lots of potential but no real current results to back it up?

If you want to discuss this subject some more, do give us a call. We always leave the formal valuations to a specialist group of advisors we employ. But if you just want to get an idea of what your business might fetch then we would love to join you in the conversation.

Craig Weston, Director

Inspired Accountants Ltd

E craig.weston@inspired.co.nz | P 09 969 7450