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.
SMEs face new challenges and opportunities with the ESG trend. This article offers a balanced breakdown of ESG, its varying perspectives, implications for SMEs, and the pros and cons.
Recently, Fair Work legislation has been amended in a number of areas and if you’re a business owner with employees, you should be across these.
When considering a mortgage, it's advisable to research different lenders and their product offerings to determine if they provide offset accounts as an option.
Several costs come with refinancing a home loan, although some of these costs are added to your new mortgage. You can get a rough estimate of the cost to refinance your mortgage by using a refinance calculator, or engaging a mortgage broker.
On settlement day, it's important to consider tasks such as reviewing the final settlement statement, ensuring funds are available for the down payment and closing costs, and conducting a final inspection of the property before completing the purchase.
A reverse mortgage is a type of loan that allows homeowners who are typically 62 years or older to convert a portion of their home equity into cash.
Mortgage refinancing is the process of replacing an existing mortgage with a new loan, typically to secure better terms, lower interest rates, or access equity in the property.
Lenders Mortgage Insurance (LMI) is a form of insurance that protects the lender in case a borrower defaults on their home loan, typically required when the borrower's deposit is less than 20% of the property's value.
I
Construction loans are a type of financing specifically designed to fund the construction or renovation of a property, providing borrowers with the necessary funds in stages as the construction progresses.
When preparing to buy a property, it's important to assess your financial readiness, research the real estate market, determine your needs and preferences, and secure financing options.
Family guarantee
When buying a first home, it's crucial to consider factors such as budget, location, property condition, future needs, and financing options.
When buying a house at auction, one should consider factors such as conducting thorough research on the property's condition, setting a budget limit, assessing potential renovation costs, and understanding the terms
Mortgage stress occurs when a household struggles with financial obligations and meeting their mortgage repayments.
The Government has announced that it will enshrine a right to superannuation payments in the National Employment Standards (NES).
Reduce interest on the non-deductible debt by using company cash to offset their personal mortgage, then transferring the cashback by 30 June.
The Australian Taxation Office (ATO) has launched a full-on assault on rental property owners who incorrectly report income and expenses.
From 1 July 2023, access to the Government’s Home Guarantee Scheme will be expanded to joint applications from friends, siblings, and other family members.
In a pre-Budget announcement, the Government has committed to a Small Business Energy Incentive Scheme that offers a bonus tax deduction of up to $20,000.
The 2023-24 Federal Budget offers a $4.2bn surplus; the first in 15 years. The surplus was driven by a surge in the corporate and individual tax take.
Effective at 30th of June 2023, our sample PCG 2021/4 report uses Dr. Nicole Smart as our example.
LIVE EVENT
5 May @ 7 - 10pm
This exclusive and intimate fundraiser event is an opportunity to meet the makers behind Crittenden Wines, enjoy fine wine tasting,
delicious food, great company and bid on silent auction items, all to raise funds for Mental Health Safety Net.
When looking to purchase a new car, there are many different ways to use finance to help you secure your vehicle.
With the ups and downs of the property market, investors and homebuyers often wonder when the right time to buy really is.
Despite international travel starting to pick up again, demand for caravans is still high.
New research has found that it has been the smaller cities of Hobart, Adelaide and Canberra that have been the strongest-performing property markets over the past two decades.
Buy now, pay later services that allow consumers to make purchases and have grown in popularity. However, for homebuyers, there might be risks that they are not aware of.
Rising interest rates and the surging cost of living are putting more Australians under mortgage stress, according to a new report.
Regional areas and high-end Sydney suburbs dominate the list of suburbs bouncing back the fastest, according to CoreLogic.
Establishing a medical or dental practice is a big undertaking. The most effective ways to purchase medical equipment is with the help of asset finance.
Demand for office space is slowly starting to recover, with a new report showing Sydney, Brisbane, Adelaide and Perth rents are moving higher.
Over the past 12 months, the value of residential approvals has declined 3.15% while the value of non-residential developments continues to grow, up 3.61%.
ONLINE WEBINAR
27 April 2023 // 12:30pm
Let's face it, insurance is not the most exciting topic. In
this webinar we'll offer guidance on how to compare different insurance policies, assess your risk, read beyond the marketing and how
to get the most value for your money.
For the contribution to be counted towards the employee’s 2023 contribution cap, it must be received by the fund by 30 June 2024.
After higher interest rates weighed on values during the second half of 2022, prices have now rebounded 0.43% since the start of the year.
A recent survey found that 75 percent of borrowers could find themselves unable to refinance because of life decisions that they were preparing to make.
Refinancing your motorcycle loan is not always something people think about. But there are several advantages that borrowers can capitalise on.
The ATO has released Draft Practical Compliance Guideline PCG 2026/D2, and it’s very clear where they’re focusing next, property development structures, particularly where land ownership and development activities are split.
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.
.jpg)
