Page 11 - SEll Your Business Booklet

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STEP 2. Business Value Appraisal continued... Valuation

Market based SNAPSHOT OF LINK’S BUSINESS SALES

Sometimes, a willing buyer and Annual Sales Discretionary
seller will agree on a value that Price Sold (plus GST) Surplus (EBPITD)
goes against traditional appraisal
methodologies. In other cases, these Restaurant $183,000 $520,000 $100,000
appraisal methodologies produce
values that don’t reflect market reality. Import Distribution $200,000 $650,000 $105,000
It’s always important to also take into
account relevant market data and Commercial Printing $310,000 $1,000,000 $250,000
multiples achieved in similar businesses
‘in the real world’. LINK brokers have Childcare Centre $650,000 $1,800,000 $150,000
a great deal of comparable evidence
across a range of industries, reflecting Specialist Retail $183,000 $183,000 $305,000
actual prices and multiples achieved.
Fast Food Franchise $680,000 $1,190,000 $195,000

Manufacturing $1,390,000 $2,380,000 $695,000
Civil Engineering $4,500,000 $10,200,000 $1,550,000

A SIMPLIFIED WAY TO CALCULATE ROI
Tom’s manufacturing company Business profits (EBPITD) $160,000
produced an adjusted net profit Minus owner’s salary $70,000
of $160,000 (EBPITD). Its net assets
(valuation of plant and stock) are Profit $90,000
$240,000 and a fair salary for ROI:
Tom is $70,000. A buyer could Profit $90,000
expect a 25% ROI, as this business Divided by desired return 25%
offers a low to medium risk
investment. Appraisal $360,000
Enjoy the process.

Avoid the pitfalls.
Sell your business

better.

LINKBUSINESS.CO .NZ 9