Adelaide Business Valuation Client Case Studies
Business Valuations and Divorce
We know that your reasons for needing a business valuation are not always a happy one. That is why we also conduct ourselves in a confidential and professional manner.
We know that the emotional side of a divorce can be draining. The last thing that you want to have to deal with at a time like this is a complex valuation of your assets. Unfortunately, in most divorce proceedings, both those handled in a court and out of one, this is exactly what is required.
This can obviously lead to friction and disagreements as the divorce proceeds. Before a fair division of assets can be arranged each asset must first be valued and valued in a way that both sides can agree on.
It may be tempting to use your usual accountant for your business valuation, but this may not the best solution. What both sides need is an outside source, someone who knows what they are doing and can be trusted to give a value free of bias.
That is why Adelaide Business Valuations is in the perfect position to help you. Our reports are conducted to the highest possible level of exactness. Our experienced valuers can be relied on to not only provide a report that reflects your business’ value but also show exactly how we reach this number.
This gives both parties peace of mind. They can see with their own eyes the conclusions we have reached and the reasons why.
Business valuations and Wills.
The formulation or enacting of a Will is a delicate process. Acting as an executor of a Will requires you to work with the grieving family and friends of the departed that may also include you. To fulfil the wishes of the deceased the first step is to determine the value of all their assets.
You also need to satisfy an often-large group. The Will and division of assets can involve not only those that stand to inherit but also people and groups that are owed money or even owe money.
Often these assets will include a business. When a business owner passes on, their business is usually involved in the execution of their Will. It is then important to be able to produce a trustable valuation that all parties can agree on.
This example will help make this point clearer.
Paul’s father has recently passed. His father was an owner of a medium sized electronics business that was now to be inherited by both Paul and his sister Rebecca. Rebecca is already working at a business in another state and so the sibling decided that the best solution is for Paul to take full ownership of the company and compensate Rebecca for her share.
The Will accounted for this eventuality and let the siblings split the inheritance in an equal way that they both agreed on. Both Rebecca and Paul wanted to deal with this matter in a fare way and avoid any unnecessary complications especially as they were both still in grief.
Our experienced valuation team always provide a business valuation that can be trusted. The certified reports that we produce not only show the value that we have calculated but also the specifics for how we reached our conclusion.
In this example the valuation we produced allowed both Paul and Rebecca to divide their fathers’ assets in a way that both could agree on. By providing the two with a reliable valuation they are now able to focus on the future.
If you need help with a business valuation, please call us today at (08) 7081 2088.
Business Valuations and Business Restructuring
There are many reasons that you might need to restructure your business. Whatever your reason is it is important to know that your tax obligations could be affected, even in the simplest of cases.
Failing to take these changes in to consideration could result in paying too much in tax or too little. This can lead to an ATO audit resulting in your business being liable to pay not only back taxes but also fines. Which could cost you thousands.
Therefore, it’s always better to be prepared with an independent business valuation performed by a team that you can trust. Unlike the ATO we have your best interests in mind when preforming a valuation. We want to work with you to ensure that you get the best outcome.
Take this example.
Frank owned and operated a small pottery business. He had been working hard over the past 5 years to build up his business to the point that is at now. But he wanted to expand the business.
He had been working with Teresa for almost the start. She had been working just as hard as he had and had some great ideas for further growth and expansion. Frank thought that it would be a good idea to give Teresa a higher stake in the company. But to do this he needed to restructure his business.
After several talks with Teresa and Frank’s accountant it was agreed that Teresa would be made part owner of the business. To achieve this the pottery business needed to be restructured. Frank’s accountant had the foresight to know that they needed to have a precise valuation preformed in order to ensure they properly complied with the ATO.
Our detailed business valuation report allowed Frank to continue growing and adapting his business while protecting himself from any issues with the ATO
Business Valuations and Small Businesses.
Each of our valuers have over 20 years of experience in the field and in that time have valued a large range of small businesses. Many of these small businesses may have appeared to be unique but each of our valuers have been able to deliver a professional and detailed service tailored to each business type.
You might think that as your business is unique it is impossible to value. But no matter the nature of your business we can help.
Take this example.
Daniel owned a small business that specialized in the creation and repair of dragons used at Chinese New Year celebrations. Daniel had helped to bring joy to thousands of people over many years of dragon dances in both big cities and small.
He provided his customers with high quality products customized to exact specifications. His brightly coloured and flexible products where renowned throughout the state and country as being a step above the rest.
Daniel wants to have his business valuated for tax reasons. He knew of only a few other businesses in the country that did that same thing as his and even then, not to the same level. This worried him as he thought his specialised business would be too difficult to value.
More than this Daniel was worried his business would not be treated with the proper respect it deserved. What Daniel did was important to him and his customers, so he needed it to be taken seriously by his valuer.
Daniel didn’t need to worry about our valuers. Our valuation team always act with the highest level of professionalism. Every business no matter how big or small is important to us and we are committed to doing the best job possible.
We treat business like Daniel’s in the same way that we would treat any other business. We chose the business valuation method that works for his business-related type, collect all the relevant data, and deliver a comprehensive report.
Buy-outs of Former Partners
Business partnerships don’t always last. There are a whole host of reasons that can lead to the brake down of a formerly healthy partnership. In these cases, your business will most likely be busy trying to retain customers or clients and perhaps moving personnel into new positions.
What you need is a business valuation team that can be relied on to perform a detailed and prompted valuation. Once this process is behind you, you can move forward with negotiations and the work that you do.
The following example will help explain this process.
10 years ago, Mr. Kelly started Kelly and Associates. They are now a successful law firm, operating in the heart of Adelaide. Kelly controls a 60% controlling interest in the company with the remaining 40% is split between four junior partners. One of these junior partners has just taken an offer at another firm in the city.
Mr. Kelly must now worry about his remaining partners new case load as well as retaining clients that the leaving partner has built a relationship with. On top of this he must also deal with buying back the former partners share.
The first step was ascertaining the value of a 10% share of Kelly and Associates. The Valuers at Adelaide Business Valuations where the natural choice. Each one has over 20 years of experience in the field and know the work of business valuations inside and out.
What was necessary in a case like this is a valuation of the company that both Kelly and Associates and the departing partner could all recognise as valid. Our valuation reports are all detailed and transparent. All parties can see exactly how we reached our value and there can be no doubt as to its validity.
Our experienced valuer also knew that it was not as simple as equating 10% of the firm’s value with the departing partners 10% share. The value of the partners share was lowered in accordance with its minority discount. As his percentage was far from a controlling one it could not be valued as a tenth of the business.
Intellectual Property and Valuations
All parts of a business can be valued. This means that a proper business valuation requires a close look at more than just its tangible assets. Things like Patents, Goodwill, trademarks, and Brand Recognition all fall under the category of intangible assets.
These intangible assets or intellectual properties hold a large amount of your business’ value. Determining the value of these asset can be even more challenging then determining the value of a tangible asset. But while challenging, for our team it is far from impossible.
There are some cases where a valuation is needed only for a business’ intellectual property. These cases are not always straight forward but our team of experts are always able to get the right results.
Take this scenario for example.
Simon owns and operates the IT firm Forward Solutions. He has developed a new type of software that streamlines the collection of information medical professionals collect on their patients. His growing success has now delivered a difficult question.
Many practices are looking to license out this new software while other bigger IT business are looking to outright purchase the software. Before Simon can make the right decision, he must be able to properly weigh out his options.
What Simon needs is two valuations, one that will show him the value of this software out right and another that will show the value as an asset to be licensed. What he needs is Adelaide Business Valuations.
First our valuers determine the enterprise value of Forward Solutions. Once this is done, we deduct the value of all tangible assets to find the value of all intangible assets. Next, we must determent the value of the software as opposed to all other intangible assets. This step requires an experienced eye.
Our valuers all have over 20 years of work in business valuations specialities and in that time have developed the skills necessary to perform this difficult operation. It requires more than an abstract knowledge of business valuation but rather someone who has real world experience.
The next valuation is comparatively much simpler. By using a market value approach our valuer is able to determine the value of Simon’s software as an asset that creates income on a continuous basis. With this information in had Simon was able to make an informed decision on the whether to hold on to or sell his software.
If you need any part of your business valued, either tangible or intangible, give us a call on (08) 7081 2088 or fill in our contact form to have one of our team member contact you to start your valuation process with us.