The Market is the Market
Over 96% of NZ businesses have less than 20 full time equivalent employees. These SMEs (Small – Medium Enterprises) are different to large businesses. They have different ownership motivations and value drivers.”
Traditional accounting models for valuing businesses provide a basis for assessing the underlying economic benefits – but non-economic benefits must also be considered alongside investment factors when appraising their value. Personal goodwill is present in almost all SME’s. Self-employment is often a motivating influence.
Business valuers have long recognised the importance of market factors when appraising smaller businesses, but the problem has been the obtaining of comparable data. After several years of research and compilation, Bizstats is able to offer data on the sales of SME’s throughout New Zealand.
Bizstats data will not provide a definitive answer for valuing a business, but it may suggest parameters and a point of centrality. It can be a Reality Check on earnings based and asset based opinions.
In addition to showing the EBPIDT and the prices for which individual businesses in various categories were sold, Bizstats data breaks down the sales price into its key components of plant, inventory and goodwill. Key ratios such as ‘Goodwill as a % of EBPIDT’, ‘Selling Multiple’, and ‘Pre-Tax ROI’ are also provided for each business. (See “Bizstats sample data” and “Explanation of Terms”)
Bizstats data has been successfully presented in NZ Courts of Law as evidence in matrimonial and civil claims. Market determined prices for comparable businesses provide a readily understood and independent reference point for business valuations.