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.