The relevance of business valuations for financial statements this year

We are fast approaching financial year-ends for many businesses. 31 December is also a popular year-end, especially for companies that are part of an international group or those that align themselves with international business markets and practices. This means many companies will be busy finalising their financial statements. This year there is a difference: Many

2022-03-24T12:25:15+02:0022 February 2021|

Worth.Business in the news: Covid-19 continues to impact business values

An article about the effect of Covid-19 on business valuations was published in Bizcommunity on 10 Feb 2021. In this article Johann de Lange, Worth.Business Director, discusses the factors to consider when doing business valuations in a Covid-19 era. The original article can be read here What type of user are

2021-04-07T08:22:35+02:0017 February 2021|

The impact of fixed assets on business valuations

Fixed assets and related cash flows are a substantial part of a business valuation. If they are not adequately recognised it will result in a flawed valuation. In this article, we discuss the treatment of fixed assets in a business valuation. Many companies have a capital expenditure budget or forecast, based on their capital program

2022-03-24T12:30:19+02:0025 November 2020|

Watch out for the overheads forecast trap

Valuers often fall into the trap of merely forecasting the overheads to grow at an inflationary rate while revenue is forecast to grow at a different rate. This oversimplification can lead to understated expenses due to there being other factors that could influence the way in which costs fluctuate. In this article, we investigate how

2022-03-24T12:31:56+02:0027 October 2020|

How a change in sales mix affects a business valuation

The optimisation of a company’s sales mix plays a significant role in driving up its value, especially if there are sustainable increased sales volume and profit margins while overheads can stay relatively fixed. The sales mix of a company means what a business sells and to whom those products and services are sold. These components

2022-03-24T12:33:40+02:0015 October 2020|

Drawing from the past to build a credible valuation

Valuation formulae for different valuation methods are fairly simple, but this also means that values can be engineered to achieve a desired outcome. Any valuation outcome, however, needs to be credible to be accepted by a willing buyer and a willing seller. Assumptions on which valuation calculations are based can be subjective, so care needs

2022-03-24T14:13:14+02:001 October 2020|

Normalising earnings in a business valuation

There are several questions that come to mind when we start talking about normalising earnings in a business valuation. Questions like; what role does the normalisation of earnings play in a valuation? Why is it necessary? How should it be approached? What are the typical adjustments?  Let us delve deeper. The concept of normalised earnings

2022-03-24T14:15:46+02:0014 September 2020|

How do non-controlling interests affect group valuations?

There are occasions when a group of companies are valued on a consolidated basis as a faster alternative than a sum-of-the-parts business valuation. This begs the question: how does one treat the presence of non-controlling interests in the group? Before we get started, it is important to note that the non-controlling interest in a group

2022-03-24T14:18:23+02:0024 August 2020|

The relevance of historical and forecast periods in a business valuation

When using the income approach for a business valuation, the assumptions on which the free cash flow forecast or dividend of the business is calculated should make sense in terms of the business’s history. Let us look at which periods should be selected to display and use in the valuation. History tells a story about

2022-03-24T14:20:47+02:003 August 2020|