Page 8 - SEll Your Business Booklet

STEP 2. Business Value Appraisal

Knowing what your

business is worth

The bottom line: your
business is worth what a 1. INTANGIBLE ASSETS Future earning
potential reflects historical earnings, can
buyer is prepared to pay. 3 include IP, rights to products or services, lease
benefits, contracts, techniques and procedures
You may have a higher figure as well as goodwill.
in mind because of the blood,
sweat and tears you’ve put into 2. TANGIBLE ASSETS These are the
your business over the years. fixtures, fittings, plant and equipment used
Or you may have undervalued by the business to generate its income –
normally calculated according to its
the business because future depreciated book value.
global consumer trends are set
to have a positive impact. FACTORS 3. STOCK The stock purchased by the
make up the business for resale or manufacturing purposes
is valued at the historical cost price, while
value of a business adjusting for old or obsolete stock.

LINK uses a combination comparative market analysis, comparing How we value each business
of established valuation your business with actual sales of similar Many factors affect the market value of
businesses, while removing outliers that
methodologies to reach the may impact accuracy. Key areas used to a business, including sector, economic
most accurate asking price. evaluate similarity are: conditions, business cycles, interest
rates, labour availability and more.
This figure is then scrutinised by • Business category And the value of trademarks, brands,
comparing the theoretical value with • Revenue intellectual property and goodwill is not
LINK’s extensive current and historical • Weighting factors always easy to quantify. The business
sales data. This ensures that the may be strongly positioned in a growth
valuation accurately represents what a • Seller’s Discretionary Earnings (SDE) industry, or a ‘sunset industry’ where
buyer will pay in today’s market. This complex methodology has been projections are less optimistic.
shaped by the University of Auckland’s Balancing these factors with the
Statistics Department, which also book valuation establishes the true
Removing the guesswork created an algorithm and correct market value. We use a combination
Valu.LINK provides a detailed, accurate statistical modelling to constantly of the following methods to value
appraisal of your business based on assess new data, so Valu.LINK remains each business.
global sales data and finely-tuned accurate and current. Data-sets are also
algorithms. The Valu.LINK tool uses customised to ensure accuracy for each
country where LINK operates.

6 SELL Y OUR BUSINESS, SMAR TER