23 / 68
SYDNEY
MELBOURNE
BRISBANE
PERTH
We deliver expert advice to business owners, along with a range of targeted services specifically for the Access and Equipment Hire industry
For more information contact our Access and Equipment Hire specialists:
+613 9611 6066
www.fordhamgroup.com.au
Richard van der Merwe
rvandermerwe@fordhamgroup.com.au
David Hinchey
dhinchey@fordhamgroup.com.au
Fordham Business Advisors Pty Ltd ABN 77 140 981 853 (03/2016)
Ad-HRIA News-Ad-APR 2016.indd 1
30/03/2016 10:45:10 AM
This is a question close to the heart of
every business owner, particularly one in
the Access and Equipment Hire industry.
Understanding the components of value
can steer an owner toward a “value
improvement strategy”, resulting in a
substantially better exit outcome. We
have seen substantial multiples paid for
these businesses over the last 10 years
… but the secret is in the ingredients
of the business, and what it offers in
particular.
Perhaps the single biggest determinant
of the value of a business is its current
and recent profit history. It represents
the reward to the current business
owner and, of course, any future owner.
Factors to be considered in driving profit
include:
• Sales and margin
• Competition
• Market focus
• Discounting
• Overhead control
• Gearing
The second major determinant of the
value of a business is “future risk”.
This is an assessment of the probability
that the profit of the business will be
maintained or grow. Factors to be
considered in assessing future risk
include:
• The dependency of the business on
the current owner
• Sustainability of competitive
advantage
• Age and extent of hire fleet
• Intellectual property
• Growth and profit trends
• Locked in contracts and revenue
• Business disciplines and practices
• Key staff locked in
• Culture and professionalism
• The market in which the business
operates
While “profit” and “risk” can see
opposing accountants argue about
theoretical value indefinitely; the
ultimate determinant of value is the
strategic position of a buyer.
Beauty is in the eye of the beholder.
Factors such as economies of scale,
cross fertilisation of products and
market, market domination or even fast
tracking of growth, can see particular
buyers pay more for acquisitions than
any accountant’s valuation.
To find out more please contact Richard
van der Merwe, Partner at Fordham
Business Advisors.
Phone: 03 9611 6066 or visit:
www.fordhamgroup.com.au.
Views in this article are the author’s at
the time of writing and contain general
information only.
ADVERTORIAL
What is your business worth?
By Richard van der Merwe, Partner, Fordham Business Advisors