JPH GROUP VALUATION BACKGROUND
JPH Group 'Full Pharmacy Valuation' reports are compiled by qualified Chartered Accountants and registered tax agents with extensive experience in the Pharmacy area.
As a member of the association of Chartered Accountants Australia & New Zealand, all valuations prepared by JPH Group are in accordance with the highest professional and ethical standards.
JPH Group valuations reports all include:
The scope and purpose of the valuation,
A background of the business in question,
Current industry-specific research,
Details of the valuation methodology applied and reasons why, and
Calculations and Definitions for a fuller understanding.
These full pharmacy valuation reports are far more extensive than the 'desktop valuations' and are able to be replied upon for bank lending purposes when instructed.
JPH GROUP FULL PHARMACY VALUATION METHOD
The valuation method used by JPH Group when valuing a Pharmacy business is the Future Maintainable Earnings (FME) method.
The formula for calculating the value of a business is:
Future Maintainable Earnings X Capitalisation Factor
Value of Business
The capitalisation factor is defined as:
“any multiple or divisor used to convert anticipated economic benefits of a single period into value.”
The capitalisation factor represents the discount rate of the expected return from the investment in the business given the risk of that business.
The adopted standard when assessing a business in the pharmacy is to use Earnings Before Interest Taxation (‘EBIT’) as the earnings basis and JPH Group also adopt this custom.
In assessing EBIT we use recent trading results, broad pharmacy industry benchmarks and our internal benchmarks gained from the multiple and various activities of our related entities JPH Lawyers and Mint Business Brokers.
REQUIREMENTS OF THE PHARMACY VALUATION
CAPITALISATION RATE DATA
The Capitalisation Rate (sometimes referred to as a risk multiple) is an assessment of risk and is determined by examining the capitalisation rates achieved in past business sales where the risk characteristics were similar. The comparable sales don’t have to be in the same industry, similar in size or even recent as risk is very stable and predictable. The Capitalisation Rate is the product of everything that does not impact on return.
The value and condition of assets within the business have no impact on this valuation method, other than the influence they may have on the business risk, as they are simply the assets that enable the generation of the income.
In order to establish the most relevant and accurate capitalisation rate to a pharmacy valuation, our firm combines the recent sales, purchases, refinances and competitor valuations for clients of all our related entities JPH Group, JPH Lawyers and Mint Business Brokers.
This provides one of the broadest capitalisation rate data range in the market.
Most Valuations are not commissioned for the sole purpose of selling the business on the open market as an arms length transaction.
It is far more common for valuations to be commissioned for the purposes of determining the value of the business that will not go on the open market.
These instances may include:
Buying a business
Selling a business
Financing for growth
Tax purposes/ transfer of asset to a new entity
Property and business resumption
Our Valuation services aim to help clients with all of their changing needs.
FULL PHARMACY VALUATION PROCESS
Price: $2800 plus GST
In order to start the valuation process, please contact one of our consultants either by phone or email.
They will discuss with you the nature of the Full Pharmacy Valuation that you desire and what financial and ancillary data and information will need to be provided as part of the process.
Additionally, the consultant will forward you a brief questionnaire to complete in order to better understand the highlights of the pharmacy business.
Once the data and financial information is collected, a consultant will also arrange for an 'on-site' inspection of the pharmacy.