Media Releases

Partnership develops new-look business value index

RMIT academics have partnered with ValueMyBusiness to strengthen its quarterly Index of Business Value Multiples.

For 11 years, the ValueMyBusiness Index of Business Value Multiples has been the only source of data available about the market value of small-to-medium enterprises.

The new partnership sees the newly re-branded VMB-RMIT Index of Business Value Multiples improved by applying the highest level of academic rigour to the data collection and analysis.

ValueMyBusiness Director Dominic Pellegrino said: “The information we deliver via the Index is crucial to understanding what a business is worth.

“Too often buyers, sellers, investors and those seeking capital have unrealistic expectations of business values, which makes it difficult to make strategic decisions, particularly when looking to sell.

“Now, by partnering with RMIT we’re introducing academic standards to a comprehensive business resource, making it even stronger – that should give all our users the utmost confidence in the legitimacy of the data.”

Professor Kosmas Smyrnios, from RMIT’s School of Management, said partnering with ValueMyBusiness provided RMIT with an opportunity to expand its research capacity into new territory.

“Working with industry is deep in RMIT’s DNA – it’s good for our industry partners and our students,” Smyrnios said.

“Collaborating with ValueMyBusiness allows us to tackle real-world problems, which feeds back into our research and teaching.

“We’re proud to bring our intellectual rigour to bear, to ensure that the index is thorough, reliable and offers value to its users.”

Pellegrino said feedback from subscribers played an important part in the decision to overhaul the Index and seek the RMIT partnership.

“Making it more accessible, easier to digest, and to provide more commentary were common themes, and so we endeavored to do that.

“RMIT’s expertise was again important in really breaking down the findings and telling a story that would be valuable to subscribers.”

The VMB-RMIT Index quarterly report provides an in-depth trend analysis of business valuations across 19 industries and businesses of different sizes.


For RMIT interviews: David Glanz, (03) 9925 2807 or 0438 547 723 or This email address is being protected from spambots. You need JavaScript enabled to view it..
For ValueMyBusiness interviews or images: James Aanensen, 0410 518 590 or 
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Media Release
April 27 2017

ValueMyBusiness and RMIT announce partnership to develop new-look Business Value Index

Latest Index shows value of SMEs dropping across the board

ValueMyBusiness has today announced a partnership with world-class educational institution, RMIT University to produce its quarterly Index of Business Value Multiples.

For the past 11 years, the ValueMyBusiness Index of Business Value Multiples has been the only source of data available about the market value of small-to-medium enterprises (SMEs).

The new partnership with RMIT sees the Index re-branded as the VMB-RMIT Index of Business Value Multiples, and is one of numerous improvements to feature in the latest edition, making it a must-have tool for anyone with an interest in SMEs.

ValueMyBusiness Director Dominic Pellegrino said that having RMIT apply the highest level of academic rigour to the data collection and analysis would significantly enhance the strength of the Index.

“The aim of ValueMyBusiness has always been to shed light on what we see as a hidden market – there is no other source of available information regarding private business values,” Mr Pellegrino said.

“The information we deliver via the Index is crucial to understanding what a business is worth.
Too often buyers, sellers, investors and those seeking capital have unrealistic expectations of business values, which makes it difficult to make strategic decisions, particularly when looking to sell.

“Now, by partnering with RMIT we’re introducing academic standards to a comprehensive business resource, making it even stronger – that should give all our users the utmost confidence in the legitimacy of the data and make it a literal must-have for anyone with a stake in an SME.”

Professor Kosmas Smyrnios, from RMIT’s School of Management, said that partnering with ValueMyBusiness provided RMIT with an opportunity to expand its research capacity into new territory.

"Working with industry is deep in RMIT's DNA - it's good for our industry partners and our students,” Professor Smyrnios said.

"Collaborating with ValueMyBusiness allows us to tackle real-world problems, which feeds back into our research and teaching.

"We're proud to bring our intellectual rigour to bear, to ensure that the index is thorough, reliable and offers value to its users."

Further to the RMIT partnership and co-branding, the new look Index is more concise, contains more commentary and more detailed analysis of the quarterly data. It’s also easier to read, and will now come with a quarterly case study.

Mr Pellegrino said that feedback from subscribers has played an important part in the decision to overhaul the Index and seek the RMIT partnership.

“Industry engagement is always important and we were very keen to talk to brokers and advisors about what they liked about the Index and about what they felt we could improve,” Mr Pellegrino said.

“Making it more accessible, easier to digest, and to provide more commentary were common themes, and so we endeavored to do that. RMIT’s expertise was again important in really breaking down the findings and telling a story that would be valuable to subscribers.”

VMB-RMIT Index - KEY FINDINGS – March 2017 Quarter


  • Businesses listed for sale, are down 1% on previous quarter
  • A marginal decrease in the overall average of the ValueMyBusiness- RMIT Index value for Micro, Small and Medium businesses
  • The proportion of businesses with VMB-RMIT multiples between 2 and 3 has steadied at its recent year lows
  • The overall ValueMyBusiness mean (median) indices show a slight decrease since the previous quarter
  • The findings in the new look Index demonstrate that the value of SMEs in general is gradually decreasing, a consistent trend over the past decade.

    Mr Pellegrino suggested that the retirement of many “baby-boomer” generation SME owners was causing an increase in businesses on the market, yet more and more were not selling, which had an impact in falling prices.

    He added that a lack of preparation for sale was in many cases a highly likely cause of a failure to sell.

    “When the time comes to sell, many owners have an unrealistic idea of what their business is worth, which creates conflict between vendor and potential buyer,” Mr Pellegrino said.

    “That’s where the Index proves vital – having a realistic idea of what the business is worth from the moment it goes on the market can make a fundamental difference to the sale process, and the outcome.”

    Mr Pellegrino said that seeking the right advice was critical and encouraged all SME owners thinking of selling to ensure they had a well-credentialed advisor on board.

    ENDS

    For further information, images or interviews contact:
    James Aanensen
    P: 0410 518 590    E: This email address is being protected from spambots. You need JavaScript enabled to view it. 

    BACKGROUND

    About the ValueMyBusiness-RMIT Index of Business Value Multiples

    ValueMyBusiness focuses specifically on monitoring and reporting on the Australian market for privately owned businesses. These businesses represent over 95% of businesses in Australia and a trillion-dollar hidden market.

    ValueMyBusiness researches and publishes a quarterly report on SME value multiples, by size and industry, for professional advisors and business owners. Reports are purchased via an annual or quarterly subscription.

    In line with the newly established partnership with RMIT University, the VMB-RMIT Index report adopts a rigorous research methodology and provides an in-depth trend analysis of business valuations across 19 industries and businesses of different sizes. Published quarterly, this Index affords up-to-date mean and median EBIT multiples of businesses for sale in Australia.

    DATA COLLECTION METHODOLOGY
    In collaboration with RMIT University, the methodology has been adjusted to ensure robustness and reliability.

    The calculation of the VMB-RMIT Index is based on the information sourced from two major platforms: 

  • Advertised businesses for sale
  • Data from advisors who are involved actively in buying and selling businesses
  • Where turnover, selling price, and the EBIT figures are available, information concerning a business is collected.

    However, the calculations of values do not include businesses that are freehold, franchise, or residential and commercial properties.

    The indices for each respective turnover and industry category are reported: mean, median, low and high value multiple.

    Median values are provided as comparison with mean values.

    Media Release
    April 2017

    Small business sector losing millions by being unprepared for sale

    Thousands of retiring baby-boomers are struggling to sell their businesses, as the value of the Australian small business market continues an 11-year downward trend.

    New data published in the quarterly VMB-RMIT Index of Business Value Multiples shows that the overall value of small-to-medium enterprises (SMEs) is in decline, with businesses of less than $5 million turnover the worst hit.

    The falling value is in direct proportion to an 800% increase in the number of businesses on the market over the past decade.

    With the baby boomer generation approaching retirement age, a lack of family business succession appears to be contributing to the market bottle-neck.

    ValueMyBusiness Director Dominic Pellegrino said that a major reason many SMEs weren’t selling was the fact they were unprepared for sale – with many having a completely unrealistic idea of what their business was worth.

    He said it is “peak time” for baby boomers to retire, and many needed to make some tough decisions about the businesses they had spent a lifetime building.

    “Most owners have an unrealistic idea of what their business is worth, which creates conflict between vendor and potential buyer,” Mr Pellegrino said.

    “Personal attachments mean owners view their businesses very differently from how the marketplace does.

    “Having an idea of what the business is worth is critical – otherwise the selling process may come as a shock, and end up costing more time and money.”

    “A surprising amount also have administration oddities or legacy issues that seem normal to the owner, but could be a red flag to a buyer.

    “Owners risk poor returns on a what can be a lifetime of investment, and costing themselves by trying to sell an unprepared business – creating this bottleneck in the SME market which is only going to get worse.”

    Wendy Bankes, 55, has been trying to sell her well established suburban hairdressing salon for almost two years, and articulates the problems faced by many owners looking to sell.

    “I’ve tried to sell my business for about two years, and I realise now that I probably didn’t put enough time into the research,” Ms Bankes said.

    “I thought I had an idea of what my business was worth, based in my experience, the location and the retail space available, but ultimately I had to halve my asking price and I was really disappointed.

    Ms Bankes said finding the right advice was critical.

    “It’s important to find someone who understands your business, and has an appreciation of why you need to sell, and the price you can sell it for.

    “They need to understand the industry and have a good idea of what other businesses are selling for.

    “Looking back now I realise that I was naive on how I went about selling the business and how it was marketed. I didn’t appreciate how difficult it would be.”

    Sue Prestney, Partner at PriceWaterhouseCoopers Private Clients, and author of the Family Business Succession Guide, agreed that both the right advice and an awareness of value were critical.

    “It is peak cycle for baby boomers and they need to understand that the way they used to do business is not going to be the same as what their children, or new owners will do it,” Ms Prestney said.

    “I also emphasise that the longer the preparation the better.

    “Generally, three years would be good, two might do, but it depends on the business size, industry, risk factors, and taxation, “particularly when you bring in a new management team–––you can’t do it overnight.

    “Most importantly, owners need to obtain the services of a certified advisor.

    ValueMyBusiness-RMIT Index of Business Value Multiples provides a benchmark values for SMEs across a range of sizes and industries. It has been providing this benchmark since 2006.

    The VMB-RMIT Index of Business Value Multiples remains the only source of data available about the market value of small-to-medium enterprises (SME’s).

    VMB-RMIT Index - KEY FINDINGS – March 2017 Quarter

  • Number of SMEs listed for sale down 1% on the previous quarter
  • A marginal decrease in the overall average of the ValueMyBusiness- RMIT Index value for Micro, Small and Medium businesses.
  • The distribution of listings with ValueMyBusiness-RMIT Index values between 1 and 2 decreased by 3% from the previous quarter.
  • The overall ValueMyBusiness mean (median) indices show a slight decrease since the previous quarter.
  • ENDS

    For further information, images or interviews contact:
    James Aanensen
    P: 0410 518 590    E: This email address is being protected from spambots. You need JavaScript enabled to view it. 

    ABOUT the VMB-RMIT Index of Business Value Multiples

    In April 2017 ValueMyBusiness announced a partnership with world class educational institution, Royal Melbourne Institute of Technology (RMIT) to produce its quarterly Index of Business Value Multiples.

    For the past 11 years, the ValueMyBusiness Index of Business Value Multiples has been the only source of data available about the market value of small-to-medium enterprises (SME’s).

    ValueMyBusiness focuses specifically on monitoring and reporting on the Australian market for privately owned businesses. These businesses represent over 95% of businesses in Australia and a trillion-dollar hidden market.

    ValueMyBusiness researches and publishes a quarterly report on SME value multiples, by size and industry, for professional advisors and business owners. Reports are purchased via an annual or quarterly subscription.

    In line with the newly established partnership with RMIT University, the VMB-RMIT Index report adopts a rigorous research methodology and provides an in-depth trend analysis of business valuations across 19 industries and businesses of different sizes. Published quarterly, this Index affords up-to-date mean and median EBIT multiples of businesses for sale in Australia.

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