What is Your Business Worth?

A Fair Market Value Assessments are highly sought after because they are credible as they place a significant weighting on the qualitative components of your business, not just the numbers.


Financial planning businesses can be valued in several different ways, depending on perspective, relevance or business opportunity.

Methodologies may include:

  • A multiple of recurring revenue
  • A multiple of earnings before interest and tax (EBIT)
  • A multiple of net profit after tax (NPAT)
  • Maintainable earnings

Fair Market Valuation Assessment

It is important to take into account:

  • Business history
  • Track record and reputation of the business, principals and staff
  • Strategic and commercial acumen of the principals
  • Scope and size of the business, i.e. funds under management, number and type of clients, product composition, average funds under management per client, platforms, pricing model, range of products, and client service offering
  • Client segmentation and age demographics
  • Growth opportunities, the strength of alliances, referral sources, client retention, and cross-selling opportunities
  • Achievement of marketing plans and business strategies
  • Advice offering, i.e. advice model or product sale business
  • Financial stability and performance
  • Client segmentation and profitability, overall profitability of the business, and consistency of ongoing revenues
  • Compliance performance, complaints, professional indemnity claims, client retention, and client satisfaction surveys
  • Product risk, such as tax effective, private investment syndicates, or declining assets such as allocated pensions, etc.
  • Other issues, such as whether the business has a niche position, location (regional or metropolitan), and whether it has any inherent intellectual property, brand, or market position

All of the above can materially impact the commercial value of your business.

A fair market value assessment can be a valuable business tool even if you aren’t planning to sell.

It can also be used for:

  • Security for raising money from a lending institution or re-financing
  • Establishing a current market price for key staff and advisors to acquire equity (a component in succession planning)
  • Assisting you in considering whether to sell your business
  • Discovering how your business compares with others
  • Resolving partnership or equity issues

To get the most from your fair market value assessment, you need to know it is a true reflection of your business today.