Views from the valuation coalface: Edition 2 (Learnings from London)

Co-founder and CEO Graham Stephen spent a few days enjoying the lights of London. Literally – they have electricity there. Here’s what he learnt.

In a start-up like bizval, it’s critical to get out there and see the global perspective on the products we are building. A trip to Accountex was incredibly worthwhile, not least of all because one of the stands included a racing simulator that spoke firmly to my motorsport blood. I’ll leave it to your imagination where bizval landed on the timesheets.

Speaking of timesheets, the world of accounting has clearly moved on. We knew this already, but a trip to London showed just how far disruption has gone. Outsourcing is everywhere, usually to countries with cheaper labour.

Will artificial intelligence have an impact on jobs created in these emerging markets? Only time will tell.

On this fact-finding mission, we wanted to learn more about the UK market as we look to expand our business. The bizval Live model can already handle global valuations, but there’s nothing like on-the-ground insights to make sure of that position.

As expected, in an ugly version of our world where Zoom and Teams became verbs rather than platforms, people have been itching for the human connection. There’s no replacement for a smile across a table and this is true in deal making as well, which is why we are investing in our relationships in the UK.

Here’s just a taste of what I learned on this trip:

1 – The UK – South Africa relationship isn’t one-way traffic

It’s easy to always assume that capital is trying to flee South Africa. We engaged with business brokers who confirmed that this isn’t always the case. There are a number of investors in the UK looking to swap bad weather for bad electricity supply, with the latter problem solvable with solar panels on the roof. There’s not much that anyone can do about the former.

As we continue to uncover fascinating South African companies and entrepreneurs who are seeking an exit, this puts us in an excellent position to introduce South African opportunities to UK-based capital and vice versa. We will be putting focus on this going forward.

2 – It’s long overdue that entrepreneurs are empowered in deals

It seems that the UK private company market is a buyer’s market. This sounds familiar, as we see the same problem in South Africa. There are “rules of thumb” about earnings multiples paid for businesses, regardless of macroeconomic conditions or the specifics of the business. You don’t need to have attended all of our webinars to know that this doesn’t sound right.

The problem is that entrepreneurs are not empowered with an understanding of the fair value of the business. There’s a reason that “know your value” has become an important tagline here at bizval. Particularly in our Concierge offering, we want to help entrepreneurs understand the fair value range for the business and the key drivers behind that value.

If you don’t know how to value a business, you certainly aren’t in a position to argue for a higher selling price as the seller or a lower selling price as the buyer.

3 – Valuations touch many service offerings

As we have come to learn in the South African market as a starting point, there are multiple services where valuations become relevant. Beyond the realm of buying and selling companies, we find alternative uses like business loan assessments and insurance policies.

Our methodology has been developed in such a way that it naturally plugs into partners who offer a range of services. Although we have more opportunities than time at the moment, it’s exciting to see the potential in the UK market.

4 – Nobody was angry with me about the rugby

The 32-12 victory of 2019 appears to have been forgotten. Perhaps the locals took pity on me based on the headlines in the global press about the state of the South African economy.

One thing is for sure: the UK is a bright light of opportunity and we fully intend to chase it at bizval.