Valuate business

Get a market related valuation on your business.

As market leaders we sell more businesses every week than any other brokerage in South Africa. Our valuation method has proved that the final price on the selling of a business is within a 5% range from the valuation that we do.

It is however an open argument that if you ask twenty different people to value your business you will receive twenty different answers.

Calculator

Assets

R .00

Assets are taken at Net Asset Value (NAV). It is assumed that any outstanding finance / loan on assets will be settled by the seller. The net value of assets will not be the same as replacement of the price of a new asset. The asset value will not be the same as the depreciated value in the financial statements of the business.

Stock

R .00

Stock is taken at cost price. Cost price for stock must exclude VAT. Stock should not be revalued.

Annual salary

R .00

This is a market related salary that one would pay a manager to run the business and obtain the profits without your own involvement (take the salary as an annual figure).

Annual net profit

R .00

Profit is always taken before tax. When calculating the profit one should always add back the current owner's own drawings from the business such as – Salaries, Expenses, Pension and Scheme Benefits & Perks. The exercise should end up with a cash flow position that the current owner receive from the business.

One should always ask yourself if this specific expense is not covered, will the business still make the same profit? If for instance the business contributes to the current owners retirement annuity and deducts it as a business expense, surely the new owner does not need to have this expense to operate the business profitably. Such current expenditure will be for the new owner's profit.

Debtors

R .00

When considering to take over debtors the two biggest influences would be the cash flow for the business and the quality of the debtors. The debtors value would be the current accounts receivable but be careful not to take over any debts older than 90 days.

Time period

in months

Also called a magic multiplier and can be compared with a P/E ratio of listed companies. This will be the period in which a buyer expects to recoups his investment from the profits of the business.

This factor is highly influenced by the type of business and how long it has been established. It is important to get professional advice from a business broker when determining this value. There is some averages of between twelve and thirty months.

Interest rate

%

This will be the interest that one may obtain from a fixed deposit at a bank. One can also compare the interest of a business loan from a bank. It is a norm that the interest rate is the average of the above.

Return on investment (percentage)

%

This is the expected return for an Investor on his money. This figure will be influenced by – current interest rate, the risk of the business, if the business have any contracts or fixed income into the future. This expected return will at least be two to three times higher than current Prime lending rate.

Result

Extra earning potential R0
Return on investment R0
Payback period R0
Business value R0
Stock R0
Debtors R0
Market value R0