Business Valuation
Practical valuation support for smaller businesses, shareholder changes,
internal planning and straightforward private-company transactions.
Business Valuation for small business and straightforward business decisions
For owners of smaller private businesses, valuation needs may arise when shares are transferred, ownership changes, a sale is considered or management wants a clearer view of business value.
We provide practical valuation support for owner-managed SMEs and straightforward private-company matters. We review relevant financial information, maintainable earnings, assumptions and market evidence before applying an appropriate valuation approach.
Our focus is on assignments that are clear in purpose, manageable in complexity and within our professional capability.
A structured business valuation may be useful when:
1) An existing accounting client wants an indicative value of a small business
An owner wants to understand approximately what the company may be worth before thinking about a sale. A formal valuation is not necessary for every business decision. A structured valuation can provide a more disciplined financial reference point.
2) Business owners considering a sale
Owners of smaller businesses who want a reasoned indication of value before discussing a potential sale or approaching prospective purchasers.
3) Buyers considering a smaller private business
Individuals or companies considering the acquisition of a relatively straight forward small private business and seeking an independent valuation perspective for their own commercial assessment.
4) Shareholders entering or leaving
Private companies and shareholders who require a financial reference point when shares are transferred between existing or incoming shareholders.
5) Family-owned businesses and succession
Owners considering succession, family transfers or changes in ownership who want to understand the approximate value of the business or equity interest involved.
6) Management seeking an indication of value
Owners who are not currently selling but want to understand the factors influencing value and establish a reasonable benchmark for future planning.
A Valuation Is More Than Applying a Multiple
Smaller businesses are often valued informally by multiplying profit by an assumed industry multiple. While this may provide a quick reference point, it does not necessarily reflect the underlying circumstances of the business.
A meaningful valuation may consider:
- the purpose and valuation date;
- historical financial performance and sustainable earnings;
- owner remuneration and related-party transactions;
- unusual or non-recurring income and expenses;
- customer or supplier concentration;
- working-capital requirements;
- capital structure, financing risk and the appropriate discount or capitalisation rate;
- growth prospects and business risks;
- available market evidence; and
- the assumptions underlying the selected valuation approach.
How Deltus Can Help
Services | Nature |
|---|---|
1. Small Business Valuation | Valuation of a relatively straightforward owner-managed or privately held business for an agreed purpose and valuation date. |
2. Private Company Share Valuation | Valuation of shares or an ownership interest in a smaller private company, including internal share transfers and shareholder changes. |
3. Shareholder Entry and Exit | Valuation support where a shareholder is entering or leaving and the parties need a structured financial reference point for discussion. |
4. Small Business Sale or Purchase | Preliminary valuation analysis for owners considering a sale or purchasers considering a relatively straightforward acquisition. |
5. Indicative Valuation and Preliminary Assessment | A limited-scope analysis may be appropriate where a full report is not required. Its purpose, procedures and limitations are clearly stated. |
Valuation Methods
1. Income Approach
Considers the economic benefits expected to be generated by the business. Depending on the circumstances, this may include capitalisation of maintainable earnings or discounted cash flow analysis.2. Market Approach
Considers available market evidence such as valuation multiples from comparable businesses or transactions, while recognising differences in size, risk, growth and other characteristics.3. Asset-Based Approach
Considers the value of the underlying assets and liabilities, with adjustments where relevant. This may be useful for certain asset-intensive or investment-holding businesses.
No single method is automatically appropriate for every company. The selected approach depends on the nature of the business, the purpose of the valuation and reliability of the information available.
A Proportionate Approach for Smaller Businesses
Our valuation service is intentionally focused on smaller businesses and relatively straightforward private-company valuation matters. We do not seek to position ourselves as a specialist valuation practice for every type of assignment. Engagements involving highly complex group structures, sophisticated financial instruments, substantial intangible assets, litigation or shareholder disputes, major transactions, complex financial-reporting requirements or other specialist valuation issues may require a valuer with deeper specialist experience or additional professional expertise. Where an assignment falls outside our normal scope, we will discuss this with the client before accepting the engagement.
Practical solutions tailored to your business
Tell us about your business and the support you require. We will help identify an appropriate starting scope and explain the information needed before work begins.