26th May 2015
Can I rely on Business Valuation Software?
Isn’t it a simple formula of Market Value = Earnings x Multiple…If only!
Assessments of business value provided by business valuation software rarely reflect the major drivers of value in a business.
A Certified Practising Valuer (Business), however, will understand all of these factors and provide guidance on the most likely selling price range of the business.
Major determinants considered when preparing a business valuation are:
- The quality of financial information available
- Future maintainable earnings of the business & growth prospects
- Tangible asset base
- Working capital required
- Competitive environment
- Strengths and weaknesses & risks to the business
- Volume of buyers and most likely buyer in current market
- Availability of finance
Treat business valuation software as a benchmarking tool only! If you require a valuation you can rely upon, there is no substitute for a professional valuation to provide an accurate assessment of value.