Things to be consider while valuing your business. Checklist for your business valuation.

1. Checklist For Business Valuation
1. Know The Purpose Of Valuation:
You should know the purpose of valuing your business in the sense that either you
are valuing your business for legal purposes, boosting its value, buying it or selling
it.
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2. Checklist For Business Valuation
2. Collect Financial Information:
You need to collect the last three years of financial information, including Tax return
of the company, end of directors, Profit and Loss Statements, Balance Sheets and
Depreciation Statements.
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3. Checklist For Business Valuation
3. Assets Information:
Similarly, collect details of all major assets in use in the business and any valuations of
the assets and the real estate. Likewise, collect management accounts (Record of
Financial performance since the last figures), budget and performance to past budgets,
any profit/cash flow projections and detail of any contingent liabilities, e.g. legal
disputes, guarantees. Compile any maintenance agreements or lease agreements
pertaining to the plant and equipment.
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4. Checklist For Business Valuation
4. Collect Market Information:
You should firstly know which market your business is in and then know either that
market is growing, steady or shrinking. You also should know your business barriers,
competitors, types of customers, suppliers and market share that your business has.
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5. Checklist For Business Valuation
5. Collect Other Commercial Information:
Collect any particular licensing or regulatory requirements, e.g. health, safety etc. that is
performed in your business.
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6. Checklist For Business Valuation
6. Analysis The Information Collected:
In the assessing the information assembled consideration of the factors affecting value is
required. These factors include:
Profit Margin
- Low profit margin reflects higher risk and trends in margins may also be an indication of
the business life cycle and its future prospects.
- High profit margins can reflect the competitive environment in which the business
operates.
Stability
- A business with a track record of steady earnings is potentially a more reliable generator of
future income than a start-up business or one with unstable past.
Types of income streams
- Differentiate between one off transactions e.g. consulting/project business and regular
continuous streams of income that might come from regular clients.
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7. Checklist For Business Valuation
7. Staff:
- Complete a roster of staff including hours worked, skills required, wages, bonuses paid
etc.
- Any copies of staff contracts.
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8. Checklist For Business Valuation
8. Systems:
-Collect operations and training manuals.
-Detail systems within the business including software, sales systems.
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9. Checklist For Business Valuation
9. Intellectual Property:
Compile a list of intellectual property, including material which is Copyright, Trademarks,
Patents and Designs and other intellectual property.
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10. Checklist For Business Valuation
10. Suppliers:
Details of any supplier contracts or special arrangements.
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11. Checklist For Business Valuation
11. Clients:
Do a quick analysis of your client base noting size of your major clients and the percentage
of your sales that they represent.
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12. Checklist For Business Valuation
12. Franchise:
- If you are franchise make sure your franchise agreement and disclosure documents are
up-to-date.
- Make sure any franchise agreement have not lapsed and that all renewals are in process
in a timely way.
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13. Checklist For Business Valuation
13. Products and services:
Make a list of the products and services that you sell or provide.
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14. Checklist For Business Valuation
14. Information Technology:
Make of list of your IT assets including software that you use, accounts you have with cloud
based services and any other IT assets.
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15. Checklist For Business Valuation
15. Competition:
List your major competitor and the difference between services and products you provide.
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16. Checklist For Business Valuation
16. Other Information:
Collect other pieces of information that might affect business value such as:
- Skills required of management and staff
- Quality of management
- Industry Lifecycle
- Reliance on owner operator
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17. Checklist For Business Valuation
17. Select Appropriate Valuation Method:
Once all the above steps are completed. You can choose a appropriate calculation business
valuation methods from below:
- Asset Valuation Method
- Market Valuation Method
- Rule of Thumb Method
- Discounted Cash Flow Method
- Future Maintainable Earning Method
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Friday, 21 June 13

19. For Advice OnYour Buying Your Franchise
BCI Business Brokers
Tony Arena (Managing Director)
3/1 Alexander Street, Crows Nest, NSW, 2065
Phone: +61 2 9439 3399
Mobile: +61 411888148
Email: tarena@bc.com.au
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20. For More Information About
How ToValue A Business PleaseVisit Our Website
www.valueabusiness.com.au
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