Business Value

Business value is primarily made up of the goodwill in the business, the business value is also made up of the plant and equipment in the business and business value is also made up of the stock in trade of the business.

Other components of business value include intellectual property, such as patents, trademarks, brands, formulae, and recipes!

Business value is a cocktail of all these ingredients and it is these ingredients that make the profit on which the business value is based. The profit of the business is usually “multiplied” by an accepted multiple for the industry and based on comparable sales evidence of similar types and sized businesses that have recently sold in the same marketplace.

But business value is not just that simple. Business value can also be affected by individual strengths and weaknesses associated with the particular business and also macroeconomic forces such as government policy changes or the Global financial crisis.

Examples of how business value can be affected just look at what has happened to the value of insulation businesses in 2009 and 2010. In 2008 business value of insulation businesses were skyrocketing but in 2010 it was plummeting, all because of outside influences on a previously stable industry business value sector.

Read other articles

Rent Roll Valuations

Rent roll valuations are one of the most common valuations done by Business Valuer Network members. We value many real estate practices each year and have a broad database of

Real Estate Agency Business Valuation

Real estate agents often sell their business or sell the rent roll which forms part of their real estate agency business. They sell their rent roll because they take the

Trades Business Valuation

Trades businesses are commonly bought and sold in Australia, but with some difficulty and at low price-earnings multiples. Why? Well, there are some barriers to entry to ownership of a

Medical Business Valuation

Medical businesses are a specific niche area of business valuation and there are very few business valuers in Australia who specialise in medical. Businesses which are deemed to come under

Cafe Business Valuation

Cafes are one of the most popular business categories in Australia. There are thousands of cafes sold every year. They are sold in such numbers because there are so many,

Mortgage Broker Business Valuation

Mortgage brokers have enjoyed a decade of prosperity in Australia with a booming housing construction market together with handsome trailing fees being paid to mortgage brokers by the banks and


The contents do not constitute legal advice, are not intended to be a substitute for legal advice, and should not be relied upon as such for any purposes. You should seek legal advice or other professional advice in relation to any particular matters you or your organisation may have.