I often get asked for ‘Rules of Thumb’ for small businesses, so I have searched the internet and compiled this list, do you agree with the ‘Rules’?
Rules of Thumb are just a starting point and many other factors need to be considered in valuing a business, it also worth considering HMRC’s views (not so good for Chefs and Hairdressers)..
Any goodwill attributable to the personal skills of the proprietor, for example the personal skills of a chef or a hairdresser, will not be transferred to the new proprietor. Advice should be obtained from the CG Technical Group if it is claimed that the goodwill attributable to the personal skills of the proprietor have been transferred with the business because his/her services have been retained for the foreseeable future by means of an employment contract. All of the relevant facts and circumstances should be established before referral to the CG Technical Group.
2 thoughts on “42 Business Valuation “Rules of Thumb” – are they right?”
Financial Services businesses could be anywhere between 3 and 5 times what the annual renewal commissions are.
Mike Twitty 07921 123388
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I am surprised there exists a blanket sheet rule of thumb for valuation for business. So many factors exist. Good article.