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Referred By
 
• Woody Woodpekers Tree Service
Broker: George Dean
To whom it may concern, I engaged George Dean from National Business Sales in January 2008 to sell my business Woody Woodpekers Tree Services P/L. From our first meeting I had a good feeling about George. I felt he was the right person to list my business with as he listened to what I wanted. I had a criteria before I would list my business such as I did not want the identity of my business advertised, how would you qualify buyers, I want to be kept informed how things are going, how much is my business worth and don't beat around the bush, tell me how it is. Well George said he would get back to me, gave me a date and I waited for his reply. George got back to me when he said he would, explained his strategy and I was happy to move forward.

Then our work began, George gave me a list of things to do so he could prepare the portfolio. Well after some intense meetings, photographic sessions and document exchange George put together the history of my business that explained where it came from, how it had grown, where it was now and where a new buyer could take it. I was extremely impressed, George got to know my business so he knew what he was talking about and could explain to buyers most questions they had.

On the second advertisement George had a client that was interested and his interest grew so much he purchased my business. George did enormous work to conclude the sale and I thank him very much.

Just to finish George has been a pleasure to work with, he did what he said he would and went over and above my expectations. I will miss some of our conversations and laughs together, a dam hard worker who gets results. I will use George in the future and would recommend George to anyone selling or buying a business.

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Selling a business can be a complex and emotional process. There are countless issues that can arise from marketing your business, valuing your business, negotiating the terms and price, structuring the transaction, understanding important legal and tax issues and maintaining your confidentiality.

Even multi-million dollar business owners would prefer to utilize the service of NBS not because larger transactions are more complex, but rather because of the inherent value, peace of mind and confidence in having an objective, third-party advisor directing and completing the sale process smoothly and professionally.

A lot of studies in the US had shown that using a good business broker will not only increase the likelihood of a successful transaction, but also achieve a better price for your business due to the fact that Business Brokers market and present your business more professionally and to a larger number of potential buyers.

The difference between NBS and the other brokers is that we have the best professional business brokers on the Gold Coast. Many of our staff members have specialised expertise in a number of industries.


There are number of valuation methods used by experienced business valuers and accountants. Vendors should seek their professional advice in valuing their businesses.

There are 2 common valuation methods:

  • Capitalization of Income Valuation
  • Multiplier or Market Valuation

Valuing a company is hardly a precise science and can vary depending on the type of businesses. In general, the value of the business will rely on an analysis of the company's cash flow. In other words, its ability to generate consistent profits will ultimately determine its value.

Capitalization of income valuation method
This valuation method uses adjusted * net profit before tax divided by an appropriate "capitalization rate" to determine the value of a business. The difficulty about this method is in choosing the appropriate "capitalization rate". There are a number of factors that valuers take into consideration in determining the "capitalization rate" and they are:

  • Owner's reason for selling
  • Length of time the company has been in business
  • Length of time current owner has owned the business
  • Degree of risk
  • Profitability
  • Location
  • Growth history
  • Competition
  • Entry barriers
  • Future potential for the industry
  • Customer base
  • Technology

This method is rather complex and difficult for the vendors to apply. It is best used for non-asset intensive businesses like service companies as this method places little value on fixed assets such as plant & equipment.

Multiplier or market valuation method
This approach uses an "industry average" sales or net profit before tax figure as a multiplier. This industry average number is based on what comparable businesses have sold for recently. Gross sales multiples are sometimes used for a quick estimate. Whereas Earning or Cash Flow Multiples are more accurate methods.

Earning Multiples Rule of Thumb

Business brokers often use Adjusted Earning Multiples Rule of Thumb that applies for different industry categories. You may wonder what adjusted earning means? Here in Australia, it means 'normalized' (i.e. maintainable) net profit before tax but after the following adjustments:

  1. Add-backs: Interest, depreciation, amortization, extra-ordinaries and/or abnormal, any private expenses such as owners superannuation, motor vehicles, insurance, mobile phone, etc., owners' wages and over-stated rental.
  2. Deductions: Comparable manager wages and understated rental.

Most small businesses in Australia sell in the multiple range of 1-2 times adjusted net profit before tax. There are some industries that tend to sell at higher multiple such as child care centers (approx 4 times), news agencies (approx 3-4 times), post offices (approx 4-5 times), and management rights (approx 4.5 times). There are situations where businesses sell at higher than their own industry norm multiple for a number of reasons:

  1. Businesses that are under management
  2. Businesses that have less than 5 working days
  3. Businesses that are under a franchise or licenses
  4. Businesses have some form of exclusivity, licensing right and/or territorial protections

However vendors and buyer should note that there are also circumstances when businesses do not sell near the industry average multiples because:

  1. The earnings have been highly volatile or in a downward trend
  2. The lease is about to run out and there is no option for renewal
  3. The business is reliant on the special skill or reputation of the vendor
  4. There was no active market for the business, in which case a buyer may pay a price which could be considerably above or below the norm, depending on the particular circumstances of the buyer.

Vendors who are contemplating to sell their businesses are welcome to contact any of our brokers for an initial evaluation of your business on 07-5592 3399 or contact us.

National Business Sales takes the privacy and confidentiality of your business and the sale of it very professionaly. Please read our privacy statement. read more
Vendors who wish to list with us are requested to sign an Appointment to Act as Business Broker. Please refer to attached form: PAMD Form 21a
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