It is surprising to many people to know that business valuations are not regulated in Australia. There are a handful of qualifications, but no formal regulation of business valuation exists…… yet. **
At present there is no universally accepted course or qualification for business valuers in Australia. There are some qualifications such as:
- The Australian Institute Of Business Brokers Registered Business Valuer qualification
- The Australian Property Institute Business Valuation Certificate
- The Chartered Accountants Business Valuer qualification
When looking for a business valuer you need to compare each valuer on their merits. Their experience, their track record, and their market knowledge. Ultimately it’s the valuer’s skill, expertise and integrity that count. Anyone can make a good first impression. It takes a little time and research to make sure that you engage a valuer knows what they are doing
The type of aspects that you need to look at when selecting a valuer include:
- How long have they been a valuer for?
- Have they acted as an expert witness, or given evidence in court?
- Does the valuer have any tertiary qualifications?
- What methodology would the valuer apply?
- Will the valuer inspect the business? (very important – we say, if you haven’t seen it, you can’t value it)
- Will the valuer’s report clearly outline all assumptions, calculations and processes? Or will they only provide a summary?
- How many valuations has the valuer completed?
- … And most importantly, what market evidence will the valuer rely upon to produce their report?
Ensure that the valuer you engage has the skills and experience that you want and the knowledge of your particular industry to competently evaluate the business value. Also be sure that the valuer will be able to reference real sales data, and that they are not just “picking a number” out of thin air. Only current sales evidence can provide a professional valuer towards a proper assessment of the current market value of a business
Make sure that your valuer will use current market data and evidence to produce your report.
There is a big difference between a market appraisal and a formal business valuation. Without detailed financial analysis, and appropriate reference to market sales evidence, the valuation report won’t be worth the paper it’s written on. Price does not guarantee quality either.
** In 2015/2016 the Australian Institute of Business Brokers will introduce a university course for business valuation in Australia.