Revamped BizStats Set to Elevate Business Valuations for AIBB Members
Revamped BizStats Set to Elevate Business Valuations for AIBB Members
Roll up, roll up.
Coming to an electronic device near you.
The all-new, super-powered, user-friendly version of AIBB’s BizStats will be released in September at the AIBB conference in Adelaide (Just another reason to attend!).
That’s not how a conservative Chartered Accountant (and AIBB member) like Richard Hemingway, the architect behind the BizStats revamp, would promote it, but he is as excited as a CA can be about this essentially new resource.
“With my background, I’m focused on data and statistics when valuing a business, so BizStats is a crucial tool, and now it’s going to be far more useful to all AIBB members,” he stated. “Data tells you everything, and helps brokers make sense of the story of our clients’ businesses.”
A Brief BizStats History
Richard explained that the data behind BizStats has been collected almost 15 years, but until now, accessing the data has been difficult.
“We’ve had brokers contributing sales information for all that time, and we now have about 3,700 recorded sales. And we’re adding around 400 sales each year, with the number of reported sales and contributing brokers increasing each year,” he continued.
The Benefits of Using BizStats
As every business broker knows, no two businesses are exactly the same, so valuing a business has to take many variables into account. Richard compared BizStats to the CoreLogic database used by real estate agents to value houses, although the data sets are much larger and in most cases, the product is much more uniform. The other key distinction is that the information contained is publicly available. There are also databases used to track values of public company transactions, which again must be publicly disclosed.
With the appraisal of value of SME businesses, the issues we face are the relative scarcity of data and the lack of uniformity of the assets being valued. That makes the data in Bizstats critical in order to inform our views on value.”
With the new Bizstats system, there will be improved depth of data which will make the process of helping our clients understand the value of their businesses that much better”, he continued.
Richard agreed that many more variables may affect a business valuation, and in some cases, there may be very few similar businesses.
“If you are valuing a cafe, for example, there are many sales to use as a guide, and the relevant characteristics are well established,” Richard explained. “But you could be valuing a business that is one of a small handful in Australia in that niche, and most of those have not been sold recently.”
“Then it is useful to access data points on other businesses that have similar value drivers but in different industries,” observed Richard. “Whatever the situation, the data in BizStats is a valuable resource as we look to put the pieces of the value puzzle together.”
What’s Changed
AIBB has partnered with a specialist development team to streamline the database as well as develop a user-friendly system to access the data.
“They are a terrific young development team who have brought fresh thinking to the project. They have developed similar systems for other organisations, so we are confident that they can deliver the result we need,”
“It’s hard to explain how different it will look, which is why we plan to demonstrate it at the conference in September.”
Why Contribute Data?
A system of this type is only as good as the data supporting it, so Richard emphasised the need for more brokers to contribute more sales data to BizStats.
“We’re constantly encouraging brokers to make the effort to upload more data. We realise that this is just another admin task that the broker has to do, so we appreciate every sale recorded,” continued Richard.
“We’ve streamlined the data input process so it should take less than ten minutes to complete, and, of course, the data is private in the sense that the identity of the participants in the sale is kept anonymous,” he highlighted.
“I see BizStats as an opportunity for AIBB members to support all the other members. If we all participate, the value of the system to members will increase significantly,” Richard observed.
And, if that’s not enough incentive, Richard also pointed out that the annual awards for business brokers are, in part, determined by the sales contributed to BizStats. “A sale is only a sale if it’s in BizStats,” Richard suggested.
Future Applications
Richard shared some of his ideas for future applications of the data;
“The financial press and the mainstream media focus on news about listed companies, but the unlisted businesses we deal with are not well covered. Together, these businesses comprise the major portion of our economy. I can see AIBB being able to provide commentary about this important sector of the economy based on trends in the data, “Richard indicated.
“This will further enhance the reputation of AIBB as a professional body and its members as professionals as well,” he continued.
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