Valuation FAQs for Clients Australia-Wide

Once we have a Letter of Instruction, we can commence work on the valuation. The Letter of Instruction outlines the business to be valued, provides contact details and confirms the terms for payment of our invoice for the job. The Instructing Party is also deemed the owner of the valuation, and therefore whoever instructs the valuation, will be provided the final report in both soft and hard formats.

The Instructing party varies based on the circumstances surrounding the requirement for the valuation. Common instructing parties are Banks, Business Owners, Solicitors, Government organisations.

The party who instructs the valuation is the ‘owner’ of the valuation. Therefore if you are a Business Owner and your Bank requires a Business Valuation be conducted, if the Bank formally instructs GWA Business Valuations, then we are compelled to provide our Final Valuation Report to the Bank. 

Please note that some Banks prefer to instruct themselves however require their clients to pay for the Valuation separately and in such instances, the Business Owner will be required to pay for the Invoice , however the Final Report would be sent to the Bank.

If you are a Business Owner and are considering a valuation, we recommend you first talk to your Bank to determine if they have a preference on who formally instructs the valuation.

We usually provide 2 hard copies and 1 soft copy of the Valuation Report to the Instructing Party, therefore if a Bank instructs the valuation, the Business Owner can contact their Bank directly to request a copy. Provision of this copy is dependent on the particular Bank’s policies.

Upon receipt of an instruction letter, GWA employees make contact with the Business Owner of the business to be valued and formally request information that will be required to complete the valuation. Once this information has been received, we will endeavour to complete the report within 10 to 15 working days from the date the information is received. 

We always strive to complete reports in as timely a manner as possible, and possibly will complete the report under this timeframe. Similarly, if due to workload, we are experiencing unavoidable delays, we will inform you promptly that the report may take longer than our usual timeframe.

If you have any particular time constraints you need us to work within, please advise at that the time of instruction so we can do our best to meet these deadlines for you.

Our Valuation Reports remain current and therefore valid for up to 3 months from the date of the Report.

GWA has prepared “Lists of Information Required” for many different business entity types, including Real Estate Offices, Supermarkets, Newsagencies, Post Offices and general Manufacturing or Service Businesses. Once we receive our Instruction to commence a Valuation, we send the appropriate “List of Information Required” to the Client. 

Common information typically requested from most businesses includes: 

• 3 years of Financial Statements including Profit and Loss Statements, Balance Sheets and Depreciation Schedules.

• Managerial Year to Date Profit and Loss Statements.

• Staffing Details.

• Lease copy and Recent Rent Invoice.

• Monthly Income data. For general businesses, we request 24 months’ of monthly income data. For Rent Roll Valuations, we request the most recent 12 months of Monthly Income Data.

• For Rent Roll Valuations, we also request a copy of the Current Property Detail Report, Current Arrears and Vacancy Reports, Copies of Licences, Audit Report of the Trust Account and a Copy of the Certificate of Professional Indemnity Insurance.

• There will also be industry/business specific information requested based on the Business type being valued.

Since its inception, GWA Business Valuations has made it our point of difference, to always inspect the business being valued. Our valuers are available to travel locally and interstate to conduct valuations.

We use our visit to touch base with Business Owners/Managers to discuss the Business and its operations and any queries regarding the information received. The site visit allows us to gain a deeper understanding of the particulars of the business being valued, as well as seeing first-hand any locational advantages/disadvantages and obtain an insight into the environment in which the business operates. This is not possible without a visit to the business. 

For Valuations of Rent Rolls, we also conduct a small audit of a sample of management and tenancy agreements during our site visit.

Nevertheless, if specifically requested by the Instructing Party, we will perform Desktop Business Valuations.

GWA staff members will always treat your business information with complete confidence. This extends to discussions between yourself and the Valuer.  

A copy of information supplied for the valuation, is included in the Appendix to our Valuation Report. If you prefer we do not do this, or there are particular items you do not want included in the Appendix, please advise us and we will ensure these items are removed from the Appendix.

Furthermore, we are experienced in Sale situations whereby oftentimes staff members may not be aware a potential Sale is underway. We will work with you to ensure that the Valuation process runs smoothly making ourselves available after hours for our visit, if this is the best option for you to retain your privacy on the valuation process.

Yes. We send our reports to the party who instructed the Valuation. If this is a Bank/Financier and you subsequently wish to change Banks/Financiers, then you will need to contact the initial instructing party and request they inform us in writing that they agree to the Valuation being assigned to another specified entity.

We can then Assign or Reissue the Business Valuation to another entity, as long as the Valuation Report is still within its term of validity, (ie. 3 months from the Date of the Valuation Report).

We will discuss the specifics of the Sale with the Instructing Party and determine what type of valuation is required. Typically, such transactions require either:

• An Amalgamated Business Valuation – This combines the current portfolio with the portfolio being purchased. The result is a Valuation of the total combined portfolio, which assumes the combined portfolio will be managed from the office of the purchasing party.

• Two separate Business Valuations – This approach provides a Valuation Report for each individual Property Management Portfolio as they currently operate.

There are several methodologies utilised in Business Valuations. Most common methods used are application of a Capitalisation Rate to EBIT (Earnings before Income and Tax), EBITDA (Earnings before Income, Tax and Depreciation), PEBIT (Proprietor’s Earnings before Income Tax), and Super Profits (EBIT adjusted for consideration of Funds Employed in Plant & Equipment, Stock and Working Capital). GWA Staff are experienced in determining which methodologies are best suited for each business type.

Other methodologies include Industry Based Methods and Discounted Cash Flows. The method applied will be clearly outlined in the report and the most appropriate method for the industry in which the business operates purpose of the valuation, and information available.

GWA have long established working relationships with several Business Brokers which we utilise to ensure our Business Valuations remain comparable to current market conditions. Where industry market sales data is available we will make comparisons to this in the valuation report. 

If market transactions of comparable businesses within the same industry are not available, a review of transactions of business within industries that respond to the same economic variables and accordingly have a similar risk profile, will be undertaken to support the valuation.