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Valuing a Training Business

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We are a smallish training and development partnership who are thinking of incorporating. To do this our accountant advises that we should value the business. We do not have many tangible assets but lots of goodwill and brand awareness. The Inland Revenue will only accept a valuation that uses a system or formula that is seen as an industry standard. Has anybody any expereince of this and if so what is the formula?
John Allen

3 Responses

  1. Accountancy
    Because of the implications for future revenue issues and the setting up of the Ltd company you should seek specialist advice. Raise this question on the sister site to this one, https://www.accountingweb.co.uk and get some info but you do need to seek the advice of an accountant before proceeding.

    The value of goodwill has caused many legal problems in valuation over the years but things to look at are value of client contracts year on year. Specialist knowledge areas not matched by competition and trademarked products. LSC contracts tend not to add much value to the business as they are for short term periods and Gov. based funds are generally taken at cash value rather than futuristic value.

    TbD GlobalLtd
    http://www.tbdglobal.com
    0870 241 3998

  2. Business Valuation
    It would certainly be worth looking at a product called the Business Valuer Software
    https://www.accountingweb.co.uk/common/partners/bvs/index.html

    Exclusive to accountingWEB, the valuer was developed specifically to answer this very common question and uses a methodology recognised and applied by a range of Government departments and Enterprise organisations.

    I would certainly echo the advice of Ms McGaughran of TBDGlobal and go one further by also recommending that you (or your accountant) look at the Incorporations Package;

    https://www.accountingweb.co.uk/resources/partners/2020/index.html

    This package contains a comprehensive checklist of the many areas that need to considered before making the final decision to incorporate and also a calculator which assists in illustrating the financial implications of extracting profits.

    I hope this helps

    Jid Ofole
    Sales & Marketing Executive
    AccountingWEB
    +44 117 915 8649

  3. Rationale for valuation
    When we incorporated almost five years ago we were not given the same advice except that we were encouraged to come up with some form of valuation in order to ascertain the amount of “shareholders insurance” cover we should have. My advice is that this is an essential ingredient of your company package as sick-leve or worse can badly affect the business and cause problems for the co-directors

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