What defines a businesses value?
There are no hard-and-fast rules on what makes one business worth more than another – it varies from business to business. Ultimately, the marketplace decides. At the moment it is very much a sellers’ market, although buyers remain discerning. Kenyon Prendeville has sold 98% of the businesses it has taken to market and achieved great outcomes for both vendors and purchasers. We have seen the trends and patterns of the marketplace, primarily through supply and demand. However, client segmentation within a business is important and can have a bearing on the multiple achieved. For example, if 40% of clients are invested in allocated pensions this will attract a lower price differential than a business where only 20% of clients are invested in allocated pensions. A business heavy in corporate super or mortgages may attract a lower multiple whilst insurance (risk) can be higher. Buyers tend to fit into three categories: Renovators. This buyer is looking for a business with clients predomina
