A sensible cynic

December 6, 2019

Australia has a wonderful enthusiasm for business ownership. Many of us want the thrill of controlling our own business, watching it grow and reaping the rewards just before retirement (the exit). The reality could not be further from the truth. Owning and operating a business is bloody hard work. You have to deal with demanding...

Read more

Valuation lies…

December 6, 2019

My second rant, as sensible cynic, is to highlight a few common features that surface in a business valuation or business exit process: Valuations / listing prices are based on a small pool of transaction evidence. Only a very small number of businesses actually sell, yet we use the statistics to value all businesses. Maybe...

Read more

Intangible asset valuations

September 3, 2018

Last time I discussed goodwill – what it is and how we estimate it in business valuations. I recently heard from Chris Mellen, a US valuations guru, about valuing a business for sale, particularly relating to intangible assets. Let’s say that a business makes a small profit, but there is significant equipment and working capital....

Read more

What is goodwill?

July 30, 2018

I have met with a range of businesses in the last 6 months where the owner is critical to the ongoing success of the business. That might be because of their unique skills (specialist doctors), relationships with clients (accountants) or intimate knowledge of the whole business (basically any founder). George, a business owner, works tirelessly...

Read more

BV “learnings”

July 6, 2018

Last post I talked about the Mysterious Vernacular of Valuations by giving a couple of examples of jargon used in the BV world. The vernacular will continue later, but one word that won’t appear in the list is “learnings1,2,3″. After a short social media hiatus, I realised that Value ADE is 18 months old, walking...

Read more

Business valuation – listed company volatility

February 5, 2018

I read with interest the headline this morning in the AFR: “ASX set to plummet after broad Wall Street sell-off” ASX set to plummet. The article explains the Dow Jones in the US declined 2.5% on Friday, the largest decline since 2016 with increasing volatility, weaker than expected profit announcements and speculation the Fed Reserve...

Read more

Value within the family – look at me

December 6, 2017

This is not a reference to Kath and Kim, more of a story about the apparent tsunami of business owners looking for the exit, following on from my last post Losing your hard earned. I had a recent client that was considering succeeding his beloved business to the family or selling to an outsider and...

Read more

Business valuation “tsunami”

November 7, 2017

A headline in the papers this morning read “Who to put your hard-earned on in the Cup”. Brilliant, the day had come for my annual bet / Melbourne Cup cramming session / pretending to know anything about how to read the form guide. 23 horses = 4% chance of winning (all horses are equal). Easily...

Read more

Business valuations – part 4

September 4, 2017

I spent yesterday afternoon with one of my boys making a gadget – a toy combustion engine given as a birthday present. I am not very handy with tools, gadgets and generally making stuff. Suffice to say the afternoon ended with an unfinished engine, a few band-aids on my fingers and some swearing under my...

Read more

Business valuations – part 3

July 24, 2017

In the last post, I talked about the selection of the “multiple” in the relatively simply formula for valuing a privately owned business: Business value = Profit x Multiple The multiple broadly represents growth and risk. So what are the risk factors and how do they impact the selection of the multiple? Pretend you are...

Read more