There are many instances where it is important for a client to be able to justify a business valuation – for a sale, purchase, share market listing, merger, insurance claim, divorce, deceased estate distribution – on the basis that they have engaged a properly qualified and resourced firm to manage the process from inception to settlement, at a level appropriate to the client’s needs and intended use of the valuation outcome.
Our staff have valued everything from cemeteries to power stations, from credit unions to cake shops and from casinos to construction companies.
There are 11 core valuation methodologies and over 350 variants in use, so the correct choice of process, system and methodology is critical.
At BPS Advisory, we start from first principles and make a strategic assessment of the business and its underlying assets, together with their capacity to generate revenues for the existing owner and / or a potential owner whether in the current use or under some alternative scenario.
Then we model the scenarios and associated cashflows to identify the factors that will influence financial outcomes to the greatest extent. Business modelling is one of our core skills and is something we do every single day – business blueprinting, process mapping and modelling are absolutely central to understanding why some businesses work and why some don’t.
We then select at least two, but usually three, valuation methods and compare the results to provide a range.
Finally, we apply the “idiot test” – what would somebody really pay for this business or asset ? Could they create it themselves at a lower cost ? Are there any other relevant factors to consider ?