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At ARGUS BUSINESS VALUATIONS,
we specialize in providing prompt, professional, competitively price valuations for a wide range of purposes.

Formal Business Valuation

What is involved in getting your business valued?
Here are the typical steps you can expect during the business valuation process:

Letter of engagement icon

Step 1: Letter of Engagement:
We both sign a ‘letter of engagement’ that clarifies what is to be valued and sets out the details of the valuation project.

Collecting information icon

Step 2: Collecting Information.
You will receive a questionnaire to fill out. We will provide you with a list of financial and other documents that are needed for the valuation.

Site Visit icon

Step 3: Site Visit and Interviews:
We visit and view the business premises. We may also interview the owners and/or senior managers.

Analysis of report icon

Step 4: Analysis of Information and Report Preparation

Valuation icon

Step 5: Completed Valuation Report is signed and delivered to you.

There are a wide variety of different methods used to value businesses.
Not all methods will be suitable for every business.
The valuer will use their knowledge and experience to determine the methods (or method) most suited to your business.

Business Valuation Methods

Capital of earnings

Capitalisation of Earnings:

This is the most widely know and used method for valuing small to medium sized businesses. The formula is as follows:

Business Value = Earnings X Multiple

This method is deceptively simple. A high level of analysis is needed to determine the ‘earnings’ figure and the ‘multiple’ that should be used for any particular business.

Comparable Transactions Method:

This method compares your business to other similar businesses that have been sold in the marketplace. Most commonly, it compares the ratio of price/profit of your business compared to businesses that have been sold. However, it could also compare other data, such as price/revenue, price/asset value etc.

This method is very well suited when the ‘market value’ of the business needs to be determined. Also, methods that consider market data on business sales are preferred under the International Valuation Standards.

Comparable Trans Method
Rule of thumb

Rules of Thumb:

Many industries have a ‘rule of thumb’ to estimate the values of businesses operating in the industry. These should always be used with caution as they do not consider all of the details (e.g. risk profile) of the business being valued. If you do use a rule of thumb, the value should always be cross checked using another valuation method.

Discounted Cash Flow (DCF)

In summary, this method forecasts the likely future revenue, expenses and other cash flows of the business. It then discounts these cash flows to their present value using a ‘discount rate’.

Due to its reliance on forecasts, the DCF is considered to be somewhat subjective. It is generally best used for internal valuation purposes, rather than external market valuations.

Discounted Cash Flow Method
Cost Approach Method

Cost Approach Methods

These methods essentially look at the values of the assets held by the business. They include the Replacement Cost Method, Reproduction Cost Method and the Summation Method.

Capitalisation of Excess Earnings Method
(Also called the Super Profits Method)

This method is unusual in that it separately values the goodwill and tangible assets of the business. It is often used for businesses that have a high level of tangible assets.

super profit method

Business Valuation Methods

Capital of earnings

Capitalisation of Earnings:

This is the most widely know and used method for valuing small to medium sized businesses. The formula is as follows: Business Value = Earnings X Multiple This method is deceptively simple. A high level of analysis is needed to determine the ‘earnings’ figure and the ‘multiple’ that should be used for any particular business.
Comparable Trans Method

Comparable Transactions Method:

This method compares your business to other similar businesses that have been sold in the marketplace. Most commonly, it compares the ratio of price/profit of your business compared to businesses that have been sold. However, it could also compare other data, such as price/revenue, price/asset value etc. This method is very well suited when the ‘market value’ of the business needs to be determined. Also, methods that consider market data on business sales are preferred under the International Valuation Standards.
Rule of thumb

Rules of Thumb:

Many industries have a ‘rule of thumb’ to estimate the values of businesses operating in the industry. These should always be used with caution as they do not consider all of the details (e.g. risk profile) of the business being valued. If you do use a rule of thumb, the value should always be cross checked using another valuation method.
Discounted Cash Flow Method

Discounted Cash Flow (DCF)

In summary, this method forecasts the likely future revenue, expenses and other cash flows of the business. It then discounts these cash flows to their present value using a ‘discount rate’. Due to its reliance on forecasts, the DCF is considered to be somewhat subjective. It is generally best used for internal valuation purposes, rather than external market valuations.
Cost Approach Method

Cost Approach Methods​

These methods essentially look at the values of the assets held by the business. They include the Replacement Cost Method, Reproduction Cost Method and the Summation Method.
super profit method

Capitalisation of Excess Earnings Method
(Also called the Super Profits Method)

This method is unusual in that it separately values the goodwill and tangible assets of the business. It is often used for businesses that have a high level of tangible assets.

Contact us now to discuss your specific needs and receive a competitive quote for your business valuation.

Our expert team is ready to assist you.