How do rising and falling interest rates affect a business valuation?

A topical issue for investors right now is the fact that stock prices are affected due to a hike in interest rates. As we currently find ourselves in a rising interest rate cycle, it is critical to consider the effect of interest rate changes in a theoretical and quantitative sense, as opposed to the market sentiment.

2022-03-31T14:47:48+02:0031 March 2022|

How is risk applied in a business valuation?

A previous article explored the relationship between risk and required returns, specifically in the context of a business valuation, highlighting the inverse correlation between risk and business value. But how is this risk quantified and applied in a business valuation? This is subject to the valuation method. Allow us to explain. The enterprise value (EV) calculated

2022-03-24T11:51:31+02:0023 February 2022|

How do risk and return work hand in glove in a business valuation?

The cliché: ‘the higher the risk, the higher the return,’ is technically not true, because the higher your risk, the higher your chances of investment failure. What the saying should be instead, is; ‘the higher the risk, the higher the demanded returns should be.’ The rationale for this is that the higher returns for successful riskier

2022-03-24T11:55:41+02:0013 January 2022|

How do I best budget and forecast to achieve maximum shareholder value?

Gearing up towards the end of the year or financial year-end, you are most likely busy compiling your business strategy, budgets and forecasts for the year that lies ahead. But, are you truly taking the most critical objective of most profit-driven businesses into consideration - which is to build maximum shareholder value? We address some of

2022-03-24T12:03:30+02:006 December 2021|

Where does the balance sheet fit into a valuation?

The balance sheet is often overlooked as a material component of the enterprise value (EV) and the equity value. It is also a misconception that it is irrelevant when determining the value of a business, based on earnings or future cash flows. This article addresses the relevance of the balance sheet when conducting business valuations. Plus,

2022-03-24T12:05:49+02:0026 November 2021|

Why business valuations matter for financial planners and insurance brokers

Wealth management and preservation are at the heart of financial planning and a major reason why business valuations are important for the financial services industry. Many entrepreneurs or shareholders in private businesses need to take the value of their businesses into account to effectively manage and preserve their wealth. Proper planning and risk management are

2022-03-24T12:10:23+02:004 October 2021|

Doing business valuations creates opportunities for financial consultants.

Financial consultants normally specialise in several fields ranging from financial services, management consulting, tax, accounting and more. With more firms using web based internet platforms they have the opportunity to branch out into other services, including business valuations. This helps consultants expand their offering and enables clients to get much more from the relationship. Along

2022-03-24T12:13:03+02:0021 September 2021|

Business values are in the clouds

Cloud-based management platforms represent a new era in business, with investors paying high premiums to be a part of the tech giants of tomorrow. With growth in the sector predicted to continue, on-demand software and cloud-based applications have forged a strong foothold in the global market.  “Businesses offering this digital edge have seen their market

2022-03-24T12:20:14+02:003 June 2021|

Increase business value with better working capital management!

Businesses often neglect their working capital management by increasing stock levels to increase revenue and operating profits. When done in conjunction with lenient credit policies, neglecting supplier payment terms and inefficient procurement, it often leads to a creeping accumulation of working capital. When this happens, the inevitable result is a shortage of cash and an

2022-03-24T12:23:04+02:0024 March 2021|

Worth.Business in the news: Business valuation part art and part science

An article about the different aspects to consider when doing a business valuation was published in Finweek on 18 February 2021. Johann de Lange, Worth.Business Director, is quoted extensively in this article and makes a valuable contribution in discussing the merits, pitfalls and tips when doing a business valuation. The original article can be downloaded

2021-02-25T10:52:24+02:0025 February 2021|