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

2021-04-07T08:38:48+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

2021-04-07T14:38:41+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

2021-04-07T14:44:17+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

2021-04-07T14:47:40+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

2021-04-07T14:50:14+02:003 August 2020|

Choosing a business valuation method

When valuing a business there are a few approaches or methods that could be taken. Let’s have a look at those approaches and in which circumstances they would be most appropriate. There are generally three approaches: the market-, income- and cost approach. Market approach This method of business valuation applies certain

2021-04-07T15:07:29+02:0014 July 2020|

The need for business valuations in an economic downturn

The rapid spread of the COVID-19 virus and the subsequent lockdown measures caused a hammering of an already weak economy. It is expected that it will take some time for the economy to recover, which will naturally impact on the risk appetite of businesses. But how will this play out in the mergers and acquisitions

2021-04-07T15:12:11+02:003 June 2020|

Valuation: Art or Science?

Is business value determined by skilled negotiators or is it an accurate and well-founded calculation performed by a skilled valuer? There are two schools of thought on the determination of the value of a business: Value is a function of negotiation in the marketplace versus the outcome of sophisticated calculations based on facts and statistics.

2021-04-07T15:31:40+02:0024 April 2020|