The reasons for financial analysis of Historic Information in valuations

The goal is to arrive at a value that represents the fair value of the business now and going into the future. To do that it is important to determine the future maintainable earnings. This represents the sustainable earnings into the future, on which the valuation can be based. It is critical, as this number drives the valuation result.

Historical Information is an integral part of determining the future performance potential. It is important to review the historical performance in detail to identify the profit streams/drivers, margins, inputs incurred, and apply this to the future maintainable earning projections.

Further the review of the historical performance, together with our understanding of value drivers in a business, can give indications of the various risk factors associated with the business. These risk factors will impact on the mechanisms used to value the business.

This together with understanding the relationship between the business, the environment and the stakeholders makes the valuation more than just a calculation, but a work of professional expertise.

The impact of the above on SMME’s is unique in many regards, and understanding their specific risks and underlying challenges is important in the process.

We have many years’ experience in professional practice working with SMME’s, as well as valuing them. As such we are well positioned to deal with these adjustments, and to get to the point of a fair valuation as soon as possible, within an appropriate fee.

Valuations will be done in terms of APES225 by a Registered Business Valuation Specialist (CA ANZ). Visit our website for more information.

For more information please contact:

Liza Vogt

liza@bizpro.global

www.bizpro.global

0426178106