Planning For Sale

UHY Haines Norton’s Business Valuations specialist Kerry Tizard provides some advice for getting your business ready for sale. Before putting your business up for sale, ensure that your business is ‘sale ready’. Having your business sale ready will increase your chances of achieving an outcome that meets your objectives and ensures that you achieve a…

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How Much Is My Business Worth?

Forensic Accounting_Valuations_LitigationUHY Director Tim Livingstone addresses a frequently asked question concerning business valuations.

A question we regularly receive from both clients and non-clients is on the value of their business.  The value of a business gets down to what the business has to sell.  Most SME (small-to medium-sized) businesses will be selling two types of assets: tangible and intangible.

The tangible assets normally include stock and fixed assets.  Intangible assets represent the non-physical items a business owns that generate income and provide a competitive advantage.  Some intangible assets can be legally transferred to a purchaser such as a franchise, lease or patent.  Others cannot and include a trained work force and key customer relationships.

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Buying A Business

We are often approached by prospective and existing clients to advise them on buying a business.  Books have been written on this topic but the following provides an overview of some of the key points that need to be considered when purchasing a business.

The Starting Point

Like a house owner, business owners often have an over-inflated view of what their business is worth.  That can result in emotional issues intruding into negotiations.

The Investment Decision

The critical decision is evaluating the business and whether it’s a good deal.  Over paying for a business means the seller has taken value off the purchaser’s balance sheet.  The ultimate decision for a business buyer is “does the investment produce an adequate return” when assessing the business nature and its risk.  It is important the buyer is clear about his/her objectives.  Is the intention to “buy a job” or is it to make a serious investment with a focus on making a good income and significant capital gain.

Keep in mind, a high percentage of small businesses fail or cease within the first 5 years and remember once you own a business your capital is at risk.

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