Private businesses
Lotus Amity specializes in valuing privately held businesses and business interests. Private businesses are valued for financial reporting purposes, employee share schemes, commercial and family disputes, restructuring and tax, transactions, start-ups and for raising capital.
Private business and share valuations may also include the value of intellectual property, goodwill, preference shares, debt and options. The size of business that Lotus Amity value range between $1 and $500 million in a range of industries, including finance, manufacturing, engineering, distribution and professional practices.
When real estate agents value a house, they are typically able to draw on sale transactions for similar sized and located properties. Unlike houses, business transaction data is often sparse and unreliable. Comparing two businesses is problematic, because there are so many other factors driving value (not just location and size).
Lotus Amity takes a comprehensive approach to valuing private business and carries out detailed analysis on factors such monthly revenue and profit trend, monthly working capital requirements, customer contracts and pipeline and customer risk. Unlike many valuers, Lotus Amity models future cash flows and discounts rates to derive an intrinsic value which is then cross checked to market data.
Experience
Examples of private business valuation engagements include the following:
- The valuation of the equity in a group of veterinary clinics. The report was prepared for the ATO to establish if shareholders were eligible for scrip for scrip roll-over relief under Subdivision 124-M of the Income Tax Assessment Act.
- The valuation of a business providing demolition services, excavation services and equipment hire. The valuation was required in relation to the small business threshold test for GST concessions.
- Valuation of a parties 100% interest in a company operating an engineering business primarily within road infrastructure. Lotus Amity prepared a single expert valuation report for the NSW Federal Circuit Court. The report analysed sales, the impact of COVID-19, contracts and quotations, project outlook, owner market salary, sales forecast and adopted an income and market valuation approach.
- Valuation of a sole beneficiary interest in a trust providing property finance, business finance and insurance broker services. Lotus Amity prepared a single expert witness report on behalf of both parties which analysed the business operations, income and loan book, expenses and balance sheets and adopted an Income, Market and Cost approach to value the company.