Business & Share Valuations

A formal business valuation can be helpful to existing or potential business owners for a number of reasons, including buy-sell negotiations. In addition, a valuation may assist with:

  • Reporting to shareholders annually
  • Succession planning – to prepare or enable a divestment or transfer of ownership
  • Capital, balance sheet or shareholder value management – for strategic decision making or balance sheet management purposes
  • Purchase price accounting and impairment testing
  • Division of property for family law purposes
  • Commercial litigation including shareholder and partner disputes and minority oppression
  • Valuation of businesses or shares in family owned companies for the purpose of settling “Relationship Property”.

Valuation Principles

Valuation has often been described as an “Art” and not a “Science”. While there remains a significant component of subjectivity (the Art) in a valuation process, it is Tony’s belief that it is not possible to get the Art right unless you first get the Science right.

Frankly, this concept of Art over Science may have been understandable 50 years ago but that was because no-one really understood the science or mathematics of valuation. And in many cases, even today, the Art became often nothing more than a considered opinion. Today, the Courts are expecting more of an expert valuer than just an opinion based on the “experience” of the expert. The Science aspect of valuation has advanced considerably in recent years having its roots primarily in Canada.

Over the past 10 years, Tony, in conjunction with a Sydney based valuation expert (Trevor Vella) has developed an integrated Valuation Model which he is able to apply to any valuation assignment he undertakes. The model relies primarily on historic financial data from which an earnings based valuation is derived. However, the model goes further than this to check the integrity of the outcome by generating a forward looking projection for up to 10 years from which a discounted cash flow (DCF) can be developed.

The model provides for ratio analysis and significant “what-if” scenarios to be investigated further enhancing the overall integrity of the process.