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Things That Influence Business Value…Fixed Assets

Whether you are considering Selling or Buying a Business, or need a Business Valuation for any purpose, it’s important to understand what influences value.  One influencer always is Fixed Assets – Personal Property & Real Estate.  Personal Property is everything from office furniture, computers and other related technology items to production equipment and vehicles.  Everything that’s typically depreciated is considered a Fixed Asset.  Listed below are a few things to consider.

Personal Property Questions & Considerations

  • What condition are your Fixed Assets in?  Is their general condition & specific condition good or bad?
  • Who provides maintenance on your Fixed Assets? 
  • Are they “state-of-the art” or dated? 
  • How do they perform and are they efficient compared to current versions? 
  • What needs to be replaced or upgraded and what is the estimated cost?
  • What have you spent on major repairs, replacement, additions in the past 3 years? 
  • Do you have items you aren’t using that could/should be disposed of?

When it comes to Personal Property, function is important (Do they do what they are intended to do?).  Age is always a factor as is production efficiency and that is precisely why you should be considering overall cost projections for the next few years. 

Real Estate Questions & Considerations

  • Is the facility used by the Business owned or leased?  Who owns it?
  • Current location and does it meet the needs of the Business?
  • Is the business at full capacity and is there room to expand the Business? 
  • Is it the right size? (Too big or too small)
  • How easily could the business be moved? 
  • What is the occupancy cost – rent, taxes, maintenance, insurance, etc. 
  • What is the condition?  How does it “show” to customers, vendors, lenders? 
  • What do employees think of it?  Is it attractive? Is it safe?

How Fixed Assets function is important.  Image is equally if not more important – more often than not it sets the tone for everyone that comes in contact with the Business and defines its brand.

The EBITDA produced by a business is always important in determining business value, no matter what the purpose.  It’s also very important to consider the likely upcoming cost to maintain, rebuild, and replace Personal Property & Real Estate.  Those costs reduce EBITDA and impact business value.  When we begin the process of appraising or selling a business, we look at all aspects, and Fixed Assets are important.

If you are considering Selling your Business or Buying a Business, or need a Business Valuation for any purpose, please contact us – we have experience.  Everything we do is confidential.

Call (513) 852-2400 or e-mail jzoellner@zoellnergarten.com.

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