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Business valuation

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Hi, I have a client that wants to sell part of their business and wants me to value it. It will be a bit of work but nothing too onerous, I’m not sure how much to charge or if to charge at all as they are a good client, any suggestions? 

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By Wanderer
09th Jan 2020 18:52

If you are not sure how much to charge are you sure you have the necessary experience and PI cover to carry out the task?

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VAT Consultant
By VAT Consultant for Hire
09th Jan 2020 22:56

I have done a number of business appraisals. The time spent, the availability of data, size of business etc - all affect the valuation fee.

As you may be aware, there are three broad approaches used for small business valuation.

-Income approach (earnings multiple, Discounted cashflows, multiple of relevent income items etc)
-Asset approach (assets less liabilities)
-Market approach ( in comparison to similar businesses - typically used in professional business appraisals)

Your report should include choice of several relevant methods under the above approaches.

Hope this helps.

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Replying to VAT Consultant for Hire:
By sammerchant
14th Jan 2020 12:21

If the owner/director is not drawing a market salary, you may also need to adjust for that.

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By Kevin Kavanagh
10th Jan 2020 13:22

Based on your previous posts you are still fairly new to taking on and advising clients. Your post here suggests some inexperience - it's not a trivial matter to value all or part of a business. Your client (and maybe the potential buyer) will rely on your opinion. If it proves to be misguided you could be exposed to legal action. Everyone has to start somewhere, but this is really a specialist area - even many established practitioners wouldn't take it on. You may be wiser to advise your client to approach a professional valuer.

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By pauljohnston
14th Jan 2020 10:00

Why not refer your client to a business that values other businesses. many will pay a referral fee, you need to ask.

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By bakirk
14th Jan 2020 10:27

I would charge fee to take account of the professional risk of getting it wrong!

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Red Leader
By Red Leader
14th Jan 2020 14:42

I always refer this work out.

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By Clinton Lee
14th Jan 2020 19:19

It depends on the size of the business.

If it's a micro business I think that it's exploitative to charge for valuation. Just pluck a number out of thin air. That's as good as any "valuation" you compute.

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