Basic Factors Influencing Business Values

Therte are various basic factors influencing business values but before discussing them you need to understand that there are various categories of businesses in Australia classified according to their size. Valuation reports can be prepared for corporate business valuations, public company valuations, privately held business valuations including SME valuations, small business valuations and micro business valuations.

Some of the basic factors influencing business values include:

  • Profit History
  • The accuracy of bookkeeping and records
  • Market Demand
  • Return on Investment (ROI)
  • Cash Flow
  • Strategic Value
  • Economic Conditions
  • The ability to transfer Goodwill and intangible assets
  • The value of Assets
  • Future earnings and profit potential

Commercial Life

One of the biggest basic factors influencing business values is a businesse's expected 'Commercial Life' and where exactly it is placed at the time of valuation or sale. For instance:

  • Leases - Have they recently been renewed or coming to an end?
  • Information Technology and Management systems - are they satisfactory?
  • Intellectual Property - Are the Trademarks or Patents that require maintenance or protection or are they about to lapse?
  • Contracts - Are ongoing contracts in place that guarantee the future potential of the Business?
  • Competitors and suppliers - How is the commercial landscape looking for the business?
  • Government influence, regulation or deregulation?
  • Reputation - What is the perception of the business or brand?
  • And much more...

Due Diligence

Through the Business Valuers Network we value a business by taking in all of the relevant basic factors influencing business values from:

  • The Vendor's importance in the business
  • The Businesses position in the market place
  • The associated documents including Registrations, Licences, Leases, Contracts and Supply Lines
  • Equipment
  • Stock
  • Intellectual Property
  • Work in Progress (WIP)
  • Accounting Records including
    • Profit and Loss (P&Ls)
    • Balance Sheets
    • Payroll
  • All these factors are taken into account by the business valuer when preparing the business valuation report.

If you wish to discuss the basic factors influencing business values contact

or call 1300634588 and discuss basic factors influencing business values with our national co-ordinator.