October 24, 2024

Gathering Information for a Business Valuation

Matt Stevenson

Managing Director


A business valuation is essentially an informed opinion of value, relying heavily on the quality of information available to the valuer. The usefulness and accuracy of a valuation can only be as good as the data on which it is based. It goes beyond just financial accounts—comprehensive information is key.

The Importance of a Checklist in Valuation

Experienced valuers often use a checklist when preparing to assess a business’s value. A well-structured checklist ensures that important details aren’t overlooked and speeds up the data gathering process. While the specific data needed will vary from one business to another, having a consistent approach provides a solid foundation for any valuation.

Key Information Areas for Valuation

1. Business Background

  • Business Structure: History of the business, including ownership type (Sole Trader, Partnership, Company).
  • Legal Details: Company registration, date of establishment, and information on the officers of the company.
  • Ownership: Details of shareholders and their respective holdings.
  • Trading Names: Any trading names used by the business.

2. Business Operations

  • Nature of Operations: General overview of activities, locations of current and past premises, and hours of operation.
  • Owner’s Input: Hours of direct involvement from the owner.
  • Organisation Structure: Key personnel, employee count, and any significant changes.
  • Labour Relations: Industrial relationship history, such as strikes or disputes.
  • Key Suppliers: List of major suppliers and terms of trade.

3. Sales & Markets

  • Product and Service Overview: Catalogues, price lists, and analysis of major products/services.
  • Seasonality: Information on seasonal fluctuations in sales.
  • Distribution: Details on the distribution system and key customers.
  • Market Position: Competitors, market share, and unique selling points.

4. Plant, Equipment, and Materials

  • State of Assets: Condition of plant, equipment, and vehicles, including any need for replacements or major repairs.
  • Maintenance Programme: Whether a maintenance programme is in place and up to date.
  • Materials: Requirements for storage, dealing with dangerous goods, and reliability of supply.
  • Compliance: Discharge permits and any environmental restrictions.

Final Thoughts

Gathering comprehensive information is an essential part of the valuation process. Whether you are a business owner, potential buyer, or advisor, having a thorough understanding of the business operations, market position, and financial history is crucial.

By having a checklist in place, you ensure that no critical piece of information is missed, providing a solid basis for a reliable business valuation.

Note on Valuation Methods

It is important to understand that every business is unique, and the valuation method should suit the specific circumstances of the business. Consult with a professional to ensure that the chosen approach accurately reflects the value of the business.

For more insights or to access market valuation data, visit Bizstats.report.

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