Purpose of Valuation
  • Is the valuation for a buyer, seller, lender, investor or other reason
    (e.g., family estate plan)?
History of the Business
  • How long has the business been operating?
  • How was the business started?
  • Has the business changed its goals?
  • What is the business' reputation
  • What is the condition of the facilities?
Employees
  • What are the job descriptions of all staff?
  • Are there any special skills required to run the business?
  • Is the business reliant on a few people?
  • What are the employees' pay rates?
  • How is staff morale?
Legal and Commercial Information
  • Is the business involved in any current or pending legal proceedings?
  • Does the business comply with environmental and workplace health and safety laws?
  • Does the business have any long-term commercial contracts?
  • How long are these valid for and how much are they worth?
  • Does the business have the necessary licenses, permits and registration?
  • What lease arrangements does the business have?
Financial Information
  • Is the business making a profit?
  • Is there working capital or sufficient cash flow?
  • How much of a loan can the cash flow support?
  • What has the annual turnover been for the past few years?
  • Have the turnover and profit been increasing, decreasing or remaining the same?
  • What tangible assets, such as machinery, buildings and equipment, does the business have?
  • What is the market value of these assets in their present condition?
  • What liabilities, such as unpaid accounts and mortgages does the business have?
  • Does the business have enough working capital to pay shareholder dividends?
  • What is the book value - rather than the retail selling price - of the stock?
  • What proportion of the stock is obsolete or unsellable?
Market Information and Industry Conditions
  • What is the short-term and long-term industry outlook?
  • Will specific economic factors directly affect the business?
  • Is this market growing, steady or shrinking?
  • Who are the business' competitors?
  • Are there any barriers to entry?
  • What market share does the business have?
  • What is the market price of similar businesses?
  • What competitive advantage does the business have?
  • What will be the impact, if any, of the departure of the current owners/managers?
Goodwill or Other Intangible Assets
  • Is there goodwill attached to the business? If so, can it be transferred to a new owner?
  • Are other intangible assets, such as intellectual property, for sale?