What is a business valuation report?
Any long-running business owner knows: valuations are a vital part of the decision-making process. As an accurate means to establish value, business valuations are the ideal service to help you understand your organisation's place in the market. Independent business valuers in Adelaide are among the most qualified and reputable professionals in the valuations industry.
Certified Practising Valuers (CPVs) work according to expectations established in the Code of Ethics for Professional Accountants (from the APESB). What this means for you is that valuations are expected to be accurate, transparent and performed with integrity.
An independent business valuation report is:
- designed to inform commercial decision-making at all levels
- compliant with the requirements of both the Australian Federal Circuit and Taxation Offices
- tailored according to the needs of the customer
- needed for every size and type of entity.
Whether it’s a start-up, small retail enterprise or a nationwide corporation, business valuations can help steer your operations in the right direction.
In addition, licensed business valuation services deliver legally certified reports. This means that a CPV is fully qualified to assist business owners with a range of official and legal matters, as well as calculating various tax obligations.
How do I get a new business valuation report?
Independent valuations can only be conducted by licensed valuers / CPVs.
CPVs are uniquely trained to establish the fair market value of any company. This is indispensable information for any business owner.
A licensed valuer:
- employs a comprehensive mix of financial, operational and market analysis
- is trained to partner with the customer and work with total transparency
- provides precise valuations from an objective standpoint, with zero conflict of interest
- utilises a series of proven methods for their analysis.
It’s a multidisciplinary process that is highly sought after for a number of reasons.
Business valuations can support structural changes and general decision-making. They’re also an important part of family, succession and strategic planning. There are services designed to guide investment decisions, as well as pre-sale/pre-purchase negotiations.
Finally, as these reports are legally certified, they are also applicable to various tax, deceased estate, family court and settlement matters.
Valuations can be performed for companies in every sector. A CPV is trained to accurately determine the value of everything from restaurants, law firms and IT companies to medical practices and retail stores. To support this, valuers specialise in management and commercial accounting, as well as financial reporting.
How to develop business valuation reporting
The accuracy of any valuation is owed to the various techniques used by qualified CPVs. Through a combination of three primary methods and particular knowledge of numerous industries, valuers can determine market value based on the current or retrospective value.
Most final reports will include the likes of:
- an exhaustive strength and risk analysis detailing the business’ longevity and more
- an explanation of the methods used and their suitability to the organisation
- a statement of fair market value
- an appendix detailing the resources and formulas used.
CPVs employ either the capitalisation of future maintainable earnings, net-based assets or discounted cash flow method.
Capitalisation of future maintainable earnings is the method most commonly used. The core of this technique is the analysis of an organisation’s historical financial statements. The valuer utilises industry-based multiples and ATO key benchmarks to establish a business’s future earnings.
This approach is best catered to small to medium-sized companies, as well as start-ups.
The net-based assets method focuses on valuing an organisation’s tangible and intangible assets. This is weighed against their financial obligations. It’s reserved for struggling businesses.
Finally, the discounted cash flow method utilises forecasted cash flow statements to establish value. This method is only appropriate for larger organisations.
How much is a business valuation report?
As discussed, there are numerous forms of business valuation services, performed for any number of reasons. For this reason, the price of these services can vary significantly from one to another.
This fluctuation is directly tied to the scope and scale of the service. That means that size and type of business can affect pricing, as can the purpose of the report and the industry the organisation in question operates within. There is no one standard price that fits every kind of valuation.
In addition, the price of a business valuation is tied to the skills, qualifications and experience that a CPV brings to the table. Each CPV will have completed enough business valuations to guarantee accuracy every time. They are held to the highest standards and so are highly sought-after.
Summary:
Independent valuation is the most accurate means to establish a business’ market value. It’s a multi-stage process based on a series of complex, well-proven methods catered towards different kinds of companies. No matter the size, type or overall performance of the organisation, there’s a valuation service to match.
A Certified Practising Valuer can provide counsel on an investment portfolio, guide the sale or purchasing process, calculate taxes or assist with various legal matters.
Each valuation is based on one of the following methods: capitalisation of future maintainable earnings, net-based assets or discounted cashflow. Valuers select the most appropriate method based primarily on the overall size and performance of the business.
CPVs are held to the highest standards for quality, integrity and objectivity. Their reports represent true market value.
To learn more about the business valuation process, contact one of our experienced CPVs today.