Valuation is often referred to as more art than science. It's the aspects that aren't purely financial that can be hard to quantify. Take for example two different financial planning practices. Both located in CBD Melbourne, both with 1million in fees (let's say 80/20 recurring revenue vs new), both with 1 owner, and the same support staff costs.
One owner has paper files, and see's clients face to face, alone.
The second owner, uses Xplan to keep all client records, and his paraplanner (wants to work on for another 10 years) attends the meetings with him.
Which firm do you think is more valuable? Clearly, the second business is more attractive to a purchaser - with both reasons.
Documentation that is easier to transfer into a new owner's systems.
A key paraplanner that could transfer and work on with a new owner - providing a familiar face for clients.
Same metrics, different qualitative factors. If you want to discuss where your business sits from a valuation perspective, and market appeal, contact our office to discuss how your characteristics could be impacting your valuation.
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