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Use a credible valuation to successfully buy or sell a business

“Price is what you pay. Value is what you get” said Warren Buffett

When you are considering buying or investing in an identified unlisted business it is important to pay the right price for the business or equity of the business. Over-paying for a business will not only reduce the expected returns on the investment but also increase the investment recovery period and financial risk of the investment. Whether you are a financial or strategic buyer, it is critical to have a strategic rationale to acquire a business. A strategic rationale will assist in assessing whether the purchase price of a business is a fair market price.

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Reputation can make or break a business


It is important for any business to have a good reputation in order to be trusted by its stakeholders and vice versa. A good reputation enables a business to survive in the short–term and grow in the long-term.

A business’ reputation is the single most important driver of value. If a business’ reputation is tainted, its revenues and market share will undoubtedly be affected negatively.

Benefits of a good reputation

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Inferior quality destroys long-term value

“The bitterness of poor quality is remembered long after the sweetness of low price” is the saying when buyer’s remorse is experienced.

I once purchased shock absorbers from a supplier after shopping around for a cheaper price. I paid an auto mechanic to fit the shock absorbers. After a few months, the shock absorbers started to malfunction, oil was leaking from the shock absorbers and my vehicle was unstable on the road. I realised that I bought shock absorbers of an extremely inferior quality. I was extremely upset about the bad purchase decision. I decided I shall never again buy any product or service of an inferior quality. I am prepared to pay more for a decent quality product or service that provides value for money i.e. it is durable, it serves its purpose and provide the expected benefits.

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Make the right business moves……quicker

 

For more information about how we can add value to your business click on this link.                                                                                                                                                    

Also download a brochure of our range of value added services by clicking here.

 

 

 

 

 

 

 

 

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Businesses and investors can create value in challenging and uncertain conditions

Owning, running and/or investing in a business should ultimately result in increasing or enhancing the value of your business and investments. Your business or your significant shareholding in a business should yield market related returns and ultimately result in the creation of value in the short, medium and long-term.

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