Valuing Intangibles, Tangibles & Working Capital During Business Sales
In Part 2 of Liam Bailey’s conversation with Stephen Groves, the focus shifts from goodwill and customer relationships to the nuts and bolts of business valuation: intellectual property, tangible assets, working capital, and how to accurately capture them in distressed sale scenarios.
Stephen walks through some practical frameworks for valuing:
- Websites, domains & trading names using the replacement cost method
- Stock, plant & equipment with input from external asset specialists
- Debtors & work in progress through a calculated lens of recoverability and billing potential
- Construction contracts & pipeline value using practical estimates for incomplete future work
Key Takeaways:
- IP Valuation Is Not One-Size-Fits-All: Logos, domain names, and websites may not fetch high prices unless they contribute meaningfully to income generation. A market-based replacement cost approach is best for conservative estimates.
- Physical Asset Valuation: In financially distressed scenarios, involving external valuers for plant and real property is strongly recommended to support any proposed restructuring.
- WIP & Debtors: These assets are often misunderstood. Groves explains the importance of calculating net recoverable amounts – especially when unbilled WIP and bad debts can reduce value significantly.
- Construction Pipelines: For trades and builders, understanding how to value future contracted work (even when the job hasn’t started) is essential. A practical percentage-based approach is often used to reflect reality.
Finally, Stephen shares what helps valuers do their job best: transparency. When business owners share full financials, customer contracts, leases, and risks, valuations are more efficient, more accurate, and more defensible if later challenged in a liquidation or ATO review.
Groves & Partners offer tiered services from simple value estimates through to comprehensive formal valuation reports. Whether you’re preparing for a restructure, considering a pre-pack, or simply want to understand your business value, getting expert help early is key.
👉 Thinking of selling or restructuring your business? Contact Groves & Partners for an accurate and pragmatic valuation.
👉 Get in touch with us at O’Brien Palmer to discuss your particular matter, confidentially and obligation free.
📞 Call: 1300 545 133
📧 Email: obp1@obp.com.au
🌐 Visit: https://obp.com.au
📞 Call: 1300 545 133
📧 Email: obp1@obp.com.au
🌐 Visit: https://obp.com.au