Simon specialises in providing valuation and forensic accounting services. Prior to founding Lotus Amity, he was a Forensic Accounting and Corporate Finance partner with BDO Australia and led their national forensic practice. Simon has worked on many cases in a wide range of industries, including assisting in multi-billion-dollar litigation in relation to the Bernie Madoff's $65bn Ponzi scheme. Simon has assisted in many valuation and legal matters, including transaction disputes, damages claims, shareholder disputes and matrimonial matters. Forensic services provided include risk and quantum assessment, valuations, investigations and interpretation of financial information. He acts as an expert witness, a shadow expert and assists in mediations. Simon is an Australian Chartered Accountant, a Fellow of the Institute of Chartered Accountants of England and Wales and a Certified Fraud Examiner. He holds qualifications in valuations including the Graduate Diploma in Applied Finance (Corporate Finance) and the CA Valuation Specialist qualification. He holds a degree in Business Economics and Management Studies and a Masters Degree in Hospitality Management. He has an Institute of Arbitration & Mediators practitioner's certificate in mediation, is certified in investigations and is a graduate of the Australian Institute of Company Directors. Simon has presented to many legal practitioners on topics such as accounting, valuations, using an expert, accounting ethics, cybercrime and accounting shenanigans.
We had the pleasure of sitting down with Simon recently to discuss key challenges and opportunities facing the industry today.
You can find the full Q&A below.
What are some key consideration a practitioner might want to think about before buying or selling their business?
When is a good time to sell? Don’t leave it too late. Don’t wait until the business has peaked and revenue is declining, and your interest is waning. Don’t leave it until you are desperate to sell, and you are forced into a corner with little room for bargaining.
What are you buying? Are current earnings sustainable? Have you considered all the liabilities, ones on the balance sheet and any that aren’t? What is your exit plan? If you buy it will you also be able to sell it and to whom?
What’s one tip you can offer for improving value to a business?
Value is driven by earnings. Increase earnings and value increases. Easier said than done! Value is based on actual earnings. You can’t say, if an acquirer makes this cost reduction here and promotes the business there, the business would make a higher X profit and, so I want a multiple of that higher potential profit. You need to put in those cost reductions and business improvements now.
What’s a mistake you see owners sometimes make related to assessing a value of their business?
Overstating value! Its far more likely owners will have a higher idea of value. Owners need to think about the investment value to the new owner. Can a new owner expect to generate the same level of earnings and at what cost?
Deductions. Has the owner deducted all liabilities, such as long service leave provisions and potential tax liabilities, to arrive at a figure for the interest in the practice?
Are there benefits in assessing the value of one’s business when they don’t plan on buying and selling?
Yes! Going through the valuation process helps an owner understand the key factors that drive value. In turn these key factors can then be focussed on and form part of the business development strategy. In a legal practice value could be tied up with improving systems and processes, repeat client work and brand awareness.
You never know when you might get a call from someone interested in your business, so it’s good to have an idea of what it’s worth.
What are some of the consequences of getting it wrong?
Not having a reasonably realistic idea of the value of the business can hinder negotiations or cause acquisition talks to fail.
You can hear more from Simon at the CPD Mandatory Core Areas for All Lawyers seminar, being held on Tuesday 20 March at the Mercure Hotel Brisbane, Brisbane.