Succession and transition specialist Bstar has created an online business capitalisation rate calculator, which financial planners can use to calculate the true value of a client’s business prior to sale.
The new tool, which took five years to develop, determines the profit multiple based on a business’ turnover, profit, free cash flow, cost of funds, indicative tax rate and investment payback term.
It also takes into consideration non financial value drivers including systems, key person reliance, staffing and customers.
The calculator, which Bstar claims eliminates the risk of valuation errors, can be applied to any industry or business and is available to anyone wanting to determine a business sale price.
