How much is my business worth?

If you’re wondering “how much is my business worth” chances are that you have spoken to one or two business brokers. You have had a few meetings and maybe you received an estimation of the value of your business. There are methods to valuing a business for its actual worth. Besides that, many aspects need to be taken into consideration when looking at valuation. 

How do Business Brokers determine the asking price of a business?

The short answer to how do business brokers determine the asking price of a business is; they use specific methods. It’s not a quick look at the premise and then an educated guess. Nope, there are specific methods that allow Business Brokers to determine the sale price of each individual business.

In W.A, only Business Brokers licensed under the Real Estate and Business Agents Act 1978 are permitted to act as an agent for a business owner during the sale of their business.

At Goodwin Mitchell O’Hehir, we commonly use the ROI (Return on Investment) method to determine the sale price of a business.

What does the ROI method entail?

Being the most common method for business appraisal, the ROI method determines the sale price by utilizing the ROI percentage. The formula for doing so is shown below:

Sale Price           =           Net Profit           x            100
                                            ROI %

For example:

A business makes $180,000 net profit to a working owner (before tax). The Return on investment for that particular industry is at 50% (for industry-specific ‘ROI percentages’, speak to your Business Broker and/or Accountant). Therefore, the formula plays out as follows:

Sale Price           =           $180,000            x            100
                                              50

Therefore, the sale price in this instance is $360,000.

Read more about valuing a business.

How much is your business worth?: GMO Business Brokers for valuing your business

When choosing GMO Business Brokers we will also assess the market during the process of conducting the appraisal of your business. We will assess businesses recently sold that are similar to yours, assess current trends, make comparisons and set a sale price that is competitive yet realistic.  

To get the ball rolling when it comes to valuing and selling a business, contact the GMO office to discuss your potential appraisal. You are always welcome to have an obligation-free discussion with one of our knowledgeable Brokers, who live, breathe and think W.A business on a day-to-day basis.

Contact us today on (08) 9481 4422, or alternatively, email your enquiry to info@buyabusiness.com.au

GMO-logo-white@2x
Facebook Twitter

Whether you dream of buying a business, want to sell your Perth or WA business, or want to know the value of your company – GMO’s business brokers and valuers are here to assist you. We have won the City of Perth Award for Business Excellence and our Managing Director has been elected as a fellow of the Australian Institute of Business Brokers. Whether you are a buyer or a seller, GMO can introduce you to the right person.

© GMO BUY A BUSINESS 2024. ALL RIGHTS RESERVED

Created by Websupport.net.au | Designed by White Mouse Design

CONFIDENTIALITY DISCLOSURE AGREEMENT

  • The disclosers are willing to disclose such information to the recipient subject to their acceptance of the following conditions:
    1. The recipient shall treat all information received from the discloser as confidential and shall ensure that all such information remains confidential and shall not use any such information in any way other than for the specific purpose aforesaid. The recipient acknowledges that all conditions subsequent in this disclosure apply to the recipient and any associates of the recipient be they partners, co‐directors, trustees, holders of shares or officersin entity(s) the recipient has interest in.
    2. The obligations of paragraph 1 shall not extend to any such information which is in the public domain, or which hereafter becomes part of the public domain otherwise than as a result of any unauthorised activity or omission of the recipient, or which is already in the possession of the recipient and was not derived from the disclosers.
    3. The recipient shall return all such information received other than that which is submitted orally at the termination of such negotiations entered into as a result of this agreement.
    4. The obligations set forth in paragraph 1, 2 and 3 shall terminate 12 months from the date of this agreement or upon the disclosers and the recipients entering into an agreement whichever event occursfirst.
    5. The recipient shall obtain no rights of any kind to such information other than for the specific purpose stated in this agreement.
    6. The receiving party will not utilise any material made available to improve, construct or change another business, in such a way as to allow that business to compete with the business being discussed.
    7. The recipient understands that the information has been compiled by GMO from details provided by the Vendor. Prospective purchasers should be aware that it is not intended that any projections or this information be treated as a representation, warranty or promise by GMO or its representatives, as to the correctness of the information, or that all relevant information is contained in the information provided.
    8. The recipient acknowledges that they will not act on information provided without first seeking independent financial and legal advice.
    9. The recipient hereby agrees to declare any beneficial interest in any business that could currently be interpreted as being in competition with the subject business.
    10. The recipient agrees to return all documents supplied within 50 days of receipt (and any copies) should they decide not to proceed. The recipient further agrees to destroy any electronic information supplied by the Seller or GMO and to instruct their professional advisors to also destroy any information passed on by the Seller, the recipient or from GMO.
    11. The recipient acknowledges they are precluded from physically visiting the premises of the business or talking to any client, supplier or employee of the business without the permission of the discloser.
    The recipient/s hereby accepts the above conditions as binding on them in respect of the information referred to.
    By ticking you are accepting and agree to our Terms & Conditions including Confidential Disclosure Agreement & Privacy Policy.

Subscribe to GMO's Monthly Hotlistings

Subscribe today to receive GMO’s monthly updates and a list of all current business opportunities
  • This field is for validation purposes and should be left unchanged.

All Search Filters

  • Business type

  • Industries

  • Search by keyword

  • Price

    $ - $

  • Net Profit

    $ - $

  • Location

  • Agents

  • Sort by Price

  • Reset