Having provided numerous business valuation reports over the years we have often been asked similar questions regarding valuation work, so thought we would share our thoughts in this complex area.
A business valuation typically assesses the price that a business would achieve from negotiations between a willing buyer and a willing seller.
Business valuations can be used for a range of purposes, including preparing for sale, admittance of a new shareholder, agreeing a value with HMRC, divorce etc.
Maximising Value: Valuations are an ideal method of identifying which aspects of your business are driving value up and areas of weakness that may be eroding value. By identifying these factors, you are positioned to focus on the changes that need to be made in order to have the best chance of receiving the maximum consideration when you decide to sell.
Strategy: By analysing the current economy and market conditions, specifically in the sector you are operating in, you can gain an understanding of where your business fits within the market. From this, you are able to identify and focus on strategies that will enable you to adapt to the current climate rather than be adversely affected by it.
Legal: We are often engaged by lawyers to undertake valuations for use in probate, divorce proceedings and as Expert Witnesses, producing reports in a concise and understandable manner.
Without extensive research and company fact finding, it is hard to gauge an accurate understanding of a business and identify the areas of weakness which may be having a detrimental impact on value. Our valuations not only look at your business and the inherent factors which may be making your business more or less valuable, we also look specifically at the industry as well as the wider economy to support the valuations and consider external impacts. We subscribe to a trusted market research site and a transaction database in order to gain a full understanding of the industry and look at recent transactions that have occurred within your sector. This gives us a realistic view of the structure and value of the transactions that are being undertaken. By adopting this approach to valuations, our clients can be assured that their valuation is based on key supporting evidence.
Randall & Payne focus on understanding the value drivers in your business and will ask the detailed questions that a website is not able to. Understanding some of the intricacies which cannot be achieved by simply inputting numbers or checking a box can have a significant impact on the valuation and its robustness.
In addition, we have experience of preparing numerous valuations over many years, throughout different economic conditions. This knowledge and experience allows us to thoroughly consider whether the valuation of the business ‘feels right’ based on experience.
We offer two types of valuation report:
Short Form: This is typically 2-3 pages long and provides the overall value of the entity, summarising the key points that have been considered in determining a value, taking in to account the most appropriate valuation approach. In arriving at a value, we research sector specific transactions that have been undertaken in recent years as we believe that these provide the best supporting evidence. Additionally, we address the industry outlook as well as the wider economy and consider how this may have an impact on value.
Long Form: This report is a more in depth version of the short form report and provides further analysis of the valuation process. A greater depth of explanation is given in respect of the effect that each contributing factor has had on the valuation and we will identify aspects of your business that are improving or eroding value. This report type provides the greatest strategic value as the output can directly filter into actions to increase business value.
If you are interested in having a business valuation or discuss the answers to any of the above questions, please contact Ollie Newbold, Head of Corporate Finance, on 01242 776000 , email email@example.com