We believe credible and defensible business valuations can only be achieved by following all the steps in the process.
- Full information (both operational and financial) underpins sound valuations. Curiosity is as important as calculating ability and the appraiser must ask lots of questions.
- The value lies in the future earnings of the business so both internal and external risks and opportunities must be considered.
- Financial accounts for most SMEs will require “normalisation” i.e. identification of discretionary expenses and reasonable owner’s remuneration.
- All approaches should be considered and appropriate methods applied.
- A Sanity Test should be applied to all valuation conclusions and a range is generally more accurate than a precise figure.