I recently read an article on accountingweb where a reply from a member suggested they were using a software package to value goodwill when incorporating a business. Does anyone know of such software?
Replies (14)
Please login or register to join the discussion.
Goodwill and general business valuation
We have developed a business valuation software tool that you may find will assist you with this. It is not specifically designed just to value goodwill but the value of businesses generally using a variety of valuation methods.
Has anyone tried this?
Has anyone tried this software? Surprised there are no trial versions available on their website? Or did I miss it?
I'm not aware of an ideal solution
But I agree it would be useful. I can guess at reasons why none exists (for use when incorporating a small business) but I can also appreciate that what accountants and their clients want is a simple calculation and record of key facts that will support the goodwill valuation used in the event of a challenge from HMRC.
Where a novice valuer has done a quick and dirty multiple of profits estimate of the value of the business goodwill; has ignored the existence of any personal goodwill; and has retained no evidence of the factors that prove the existence of business goodwill - HMRC can have a field day. Such an approach is hardly going to win prizes for professional competence and integrity either.
I'll ask around (beyond Accountingweb) but I'm not helpful that such a package exists or that any decent valuations specialist would want to create one.
Messaage to anonymous
If you can explain in what way you don't understand I'll be happy to clarify if I can. Without any further comment though I wouldn't know where to start. Sorry.
Mark
This bit....
I'll ask around (beyond Accountingweb) but I'm not helpful that such a package exists or that any decent valuations specialist would want to create one.
I think all Mark is saying ...
is that it is a complicated area that does not lend itself to an 'off the peg' bit of software and why would a specialist want to develop such a thing and by doing so devalue what he/she does for a living.
The package AWEB used to promote
...was the Business Valuation Software developed by John Welford-Costelloe. The application was designed to support a number of techniques: book value; market value (for quoted companies); diluted cash flow; and profit/sales multiple.
There is no reference to goodwill in the online information; as Mark Lee suggests this represents the intangible value that the owner negotiates, or the cash value the buyer is willing to pay above the value of documented assets (NB - I'm no tax expert).
I'll contact the developer and see if he can enlighten you on this point and add to the overall debate.
__________________________
John Stokdyk, Technology editor
Trial Version
True they don't have a trial version... but they do have a "Video Demonstration".
Seems fairly complex...
Valuing Goodwill in Small & Medium-sized Enterprises
The comments made by Mark Lee, above, are fairly sound and sensible. There are a number of issues relating to the valuation of Goodwill which it is as well to be aware of, in order to reduce the chances of significantly mis-valuing acquired Goodwill and other intangible assets, for tax purposes.
There is an article entitled "SME Valuations: Goodwill and Discount Rates" which was published on AccountingWEB back in April 2008, and which is still on the web-site - under the Practice section:
https://www.accountingweb.co.uk/item/181725
At the bottom of this article is a link to an earlier article on "Valuing your unquoted company's shares"and to a number of other articles on valuation-related matters.
Demo available
Just to let you know, TBV now offer a demo version. www.thebusinessvaluer.co.uk
I've given it a go and have just purchased the full version which works brilliantly.
Simon
Hmmm... an automated expert...
rather timely this popping back up, after PwC got sued so badly for their rote valuation!
There'll be rocket science software next.