What is the value of my business?

There are various drivers used to appraise the business value of your practice.

The income approach is a widely used method for valuing businesses, including medical and dental practices in Australia. This approach relies on the concept that the value of a business is driven by its ability to generate future income or cash flow.

The primary drivers of a business value are EBITDA (earnings before interest, taxes, depreciation and amortisation) and multiples of EBITDA.

The calculation will also take into consideration factors that include:

  • area/location
  • brand recognition
  • leases, licenses and permits
  • customer loyalty and relations
  • reputation of your business
  • customer lists
  • business operation procedures
  • equipment and fit-out
  • staff performance

Other drivers to calculate the value of your business include:

Book Value

The value of the business is calculated by subtracting liabilities from total assets from the balance sheet.

Price to earnings ratio:

Calculate the P/E ratio by dividing the market value of your business by its earnings.

Discounted Cash Flow:

Project future cash flows, discount them to their present value using an appropriate discount rate.

Owner’s discretionary cash flow

Determine the owners discretionary cash flow by adjusting your business’s financial statements to reflect the true earnings available to the owner. Apply a multiple to owner’s discretionary cash flow to estimate value.

Asset Based Valuation.

Calculate the value of tangible assets such as inventory, equipment’s and real estate, and subtract liabilities to determine your net asset value. Assess the value of intangible assets like trademarks, patents, brand recognition, customer relationships.

Professional certified valuer

Engage the services of a certified business valuer. They can provide a comprehensive, detailed accurate assessment based on industry standards and market conditions.

The appropriate methods will depend on your specific circumstances and objectives.

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