Business Valuations for selling

Business Valuations for selling

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Hi
I have a couple of clients who need their businesses valued for 2 different reasons - one is getting divorced and his solicitor needs to know and the other is looking to sell - I have looked around at various methods but wanted some opinions/thoughts? Is buying software to do this a waste of money or worthwhile? These are both small limited companies - one shareholder, director, one is a beauty clinic the other is a management consultant.....(the latter is the one getting divorced)

Any advice would be appreciated, thanks!
ScottishAccountant

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By AnonymousUser
18th Sep 2008 16:12

Different way
There are also different issues when looking at valuations for tax, commercial and also matrimonial issues. You need help from a specialist as the others have said.

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By User deleted
18th Sep 2008 12:41

Tricky indeed
The divorce situation may not be an ideal one for you to cut your teeth, as another expert opinion is likely to be sought I would imagine. Much would depend on whether the management consultancy is just one man or a larger organisation. If the former then you are just looking at valuing personal goodwill or his future earnings capacity.

Beauty clinic is likely to be more straight forward but you would have to consider a number of factors, amongst other things - client list, client retention, location, competition, length of trading, premises/equipment. You are likely to end up attaching a multiple to a maintainable earnings figure, both of which are subjective to different degrees.

I don't believe that valuation software is of any real merit as it cannot possibly deal with all variables for all business sectors.

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By User deleted
18th Sep 2008 11:51

Valuations can be tricky!
If you haven't done valuations before, don't bother looking at software as the answer, get in touch with someone who has done valuations of companies and learn how they do it.

There are many different methods of valuing companies, and just because it is so straightforward for us accountants (ie., 1.25 times turnover plus net assets), it is not so with many other businesses. There may be strategic reasons why businesses may have higher or lower values than usual.

For a large company I'd suggest using a broker like BCMS (www.bcmscorporate.com), and if this is an area you'd like to get into it's worth speaking to them.

On the other hand, if your clients are very small, find a local firm that does valuation, sub the work to them, and go through their processes with them, that way you'll be prepared to do it yourself next time!

Hope it goes well.

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