What your business is worth, and why
A business valuation is an independent, written opinion of what the business would change hands for between a willing buyer and a willing seller, with the reasoning set out so both can test it. Owners need one for a sale, a partner coming in or going out, a restructure, a bank, an estate or a dispute. The number matters, but what most owners find more useful is the explanation of what drives it, because that is the list of things to work on before the sale.
Valuations at New Wave are prepared by our valuations team inside the accounting firm, so the normalised earnings, the tax position and the structure are worked out from the real file rather than a seller’s summary. The report is quoted up front before we start.
When you need one
- Selling the business. To set an asking price you can defend and to know which buyer offers are worth answering.
- Bringing in or buying out a partner. A fair entry or exit price, and the funding and structure to make it happen. Common in medical, dental, allied health and professional practices.
- Restructuring. Moving a business between entities requires a market value for the tax calculations.
- Finance. Lenders and investors want an independent view before they commit.
- Disputes and family law. An independent valuation that each side’s lawyer can rely on.
- Succession and estate planning. Handing a business to the next generation or equalising it among family members.
How the business is valued
Normalised earnings
Three years of financials adjusted for market-rate owner salaries, one-off items, related-party rent and anything a buyer would not inherit. This is where most of the work and most of the difference between a rough guess and a defensible number sits.
Method
Most trading businesses are valued on a multiple of maintainable earnings. Asset-heavy or loss-making businesses on net assets. Businesses with a long contracted revenue stream on discounted cash flow. We use the method a buyer in your industry would, and say why.
Benchmarks and risk
Industry multiples, comparable transactions, customer concentration, key-person dependence, lease terms, and how much of the business lives in the owner’s head. Each moves the multiple, and each is something you can change.
The report
A written report with the valuation, the method, the adjustments and the risk factors, and a meeting to walk through it. If you are two or three years from a sale, we also set out what to change to lift the number, and the advisory team can help you do it.
Buying rather than selling
If you are the buyer, you need the valuation plus a check that the business is what the seller says it is. That is due diligence, and the two are usually run together.
How it starts
- A free 30-minute discovery call with a New Wave team member to understand the business and what the valuation is for, because the purpose changes the approach.
- A quote within the week, agreed up front, and a document request list.
- Most reports are delivered in two to four weeks from receiving the documents, faster where the file is already with us.