A valuation determines the estimated amount for which an asset should exchange on the Valuation Date between a willing buyer and a willing seller, in an arms’ length transaction after proper marketing, wherein the parties had each acted knowledgeably, prudently, and without compulsion.
In assessing the value of a business for Family Law purposes, we can utilise the following valuation methodologies:
- Discounted cash flow;
- Capitalisation of maintainable earnings;
- Asset-based methodologies; and
- Industry-specific methods.
To assist the valuer, it is important to have the following prepared:
- Financial Statements and tax returns for the last three historical financial years and year to date management accounts;
- Any budgets or forecasts prepared;
- Analysis of competitors;
- Copy of the lease for the business premises including any renewals and details on the size of premises;
- Copy of any loan agreements;
- Copy of key supplier/customer contracts;
- Copy of constitution/trust deed/partnership agreement/shareholders agreement; and
- Copy of any independent property valuations obtained for property, plant, or equipment.
Details of the following for the last three historical financial years and year to date management accounts:
- Analysis of sales by customer or nature;
- Breakdown of remuneration paid to the owners or associates, including superannuation;
- Details of any private expenditure included in the profit and loss statement; and
- Explanation of fluctuations in revenue and expenses including one-off income or expenses.
HOW CAN RSM HELP?
If you have any questions regarding preparing a business valuation, get in touch with your local RSM office.