Every business owner is naturally curious about just how much their business is worth. However, for every business that sells at an attractive price, there are others that struggle to sell, let alone fetch a premium. The question is, what makes a difference?
When you come to sell a business the first question is, what are you selling? In most cases, this is fixtures and fittings, plant and
equipment, stock on hand, and the goodwill of the business. Generally, a buyer won’t want to purchase your liabilities or your business
structure, nor will they want to collect your outstanding debtors. Most business sales become a sale of business assets.
These assets are relatively easy to value with the exception of the goodwill. The value of plant and equipment and trading stock can
generally be agreed. The tension tends to be around the value of the goodwill because goodwill is made up of many intangible assets that
can’t be readily quantified.
We can all agree that there is value in these assets but the question is, how much? Goodwill is basically the value of the future free
cashflow of the business. Based on how your business is structured, it is the value of the profits the business can generate in the
future. This is what a buyer is prepared to pay for.
If a buyer has a reasonable certainty of profits and free cashflow in the future, then this is worth something. By comparison, a start-up
business will have a higher level of risk and no certainty that profits can be generated. In general, a new business may need to trade for a
number of years at a loss before it can establish itself and generate profits. Goodwill is what you are prepared to pay to avoid the
risk and the ‘time to establish’ factor.
So, what influences business value and what will people pay for?
It is possible to get a price that is widely different from the norm. Unique businesses, unique circumstances, and unique opportunities can
always produce ‘an out of the box’ price. If you can build something unique, then you may achieve a price beyond normal expectations. At the
end of the day however, the market will set the price.
If you are planning on selling your business, identify who your buyers might be. There could be a purchaser who is prepared to pay a large
premium to own your business because of the accretive value or because it is pivotal to their growth strategy.
And, even if you are not thinking about selling your business, the reality is that one day you will. If you build your business with this in
mind, then you should look to do the things that will grow your business value from year to year.
Our expert accounting and business consultants can help ensure a smooth transition when you're ready to step out from your business.
The ATO has issued a warning to trustees of SMSFs about sloppy valuation practices.
The ATO has issued a warning to trustees of SMSFs about sloppy valuation practices.
In this episode we explore the key areas in your business that you can influence to promote growth, adapt the seven ways to grow for your unique business, and understand how these strategies impact your profit and cash flow.
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As conflicts between nations flare into open armed warfare and elections around the world become more contentious, there’s plenty to spike investor concern. We look at how wars and political tensions influence investment markets over the long term and examine the im- plications for your retirement savings.
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In this episode of The Accountant That Builds, Shannon's expert advice will help you make informed financial decisions and stay connected to your goals, ensuring a financial future you are committed to work towards.
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The difference between the price of units and houses continues to grow, with homes now costing $300,000 more.
The national median house price officially reached $1,005,242 marking the highest price on record.
Vendors are looking to capitalise on rising prices with a surge in new listings hitting the market across Sydney and Melbourne.
Running a business is not just about crunching numbers and meeting targets; it's also about fostering a strong team dynamic and creating a shared vision. That's why I recently organized a 2-day corporate retreat for the entire SMART team at Phillip Island, and it turned out to be an unforgettable experience.
A recent case highlights the dangers of taking money out of a company without carefully considering the tax implications.
The revised stage 3 tax cuts have passed Parliament and will come into effect on 1 July 2024.
From 1 July 2024, the amount you can contribute to super will increase.
Thousands of taxpayers and their agents were advised by the Australian Taxation Office that they had an outstanding historical tax debt.
In Australia, testamentary trusts have become useful for more people than ever before. They're not just for the wealthy anymore.
In this podcast episode of The Accountant That Builds we're starting off with a deep dive into the world of superannuation, helping you understand how to make the most of your retirement savings.
There are effective ways to fit out your practice for maximum efficiency and success.
Construction cost increases have reaccelerated, but the good news is they are now returning to their normal trend.
Jackie Prossor shares her story on growth and evolving as a professional and a business owner, with the help of Shannon and the SMART Business Solutions team.
Commercial transactions could start to rebound in 2025, with lower prices.
A rally in the second half of the month helped global share markets generate solid gains in January, extending the rally from November and December.
Simone was burdened with excessive debt. They have a large house with a large mortgage. Not only did this mean that her and her family were going backwards financially, she was stressed and this was affecting her ability to concentrate for long hours.
Investing in property can be a lucrative venture, especially for small business owners looking to diversify their portfolio or secure a stable source of income.
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Before committing to any car loan, it’s vital that you examine the fine print. Ensure you understand every aspect of the loan and ask questions.
A stable employment history is important when it comes to assessing your borrowing power.
In the ever-evolving landscape of small business ownership, it is imperative to remain vigilant and proactive, especially when it comes to financial management. We delve into key strategies and insights to help small business owners navigate financial challenges effectively.
In this episode of The Accountant That Builds, Shannon Smit talks about business structure and setting yourself up with the right foundations to ensure a stable ground to encourage business growth, hiring, expansion and compliance.
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The smaller capital cities of Perth and Brisbane are expected to be the top performers over the next 12 months.
Tax planning is more than just a financial necessity—it's a strategic advantage for businesses of all sizes. By proactively managing your tax strategy, you can significantly reduce your liabilities, enhance cash flow, and ensure full compliance with ever-evolving tax regulations.
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