News & Insights

Insolvent trading

What is Insolvency? Insolvency is defined by the Corporations Act 2001 (Cth) (the Act) in that a company is solvent If it is able to pay all of its debts as and when they become due and payable. If a company is not solvent, it is insolvent. Directors have a duty under the Act to...

Temporary Insolvent Trading Moratorium Update

Earlier this year, the Australian Government introduced the Coronavirus Economic Response Package Omnibus Act 2020 (Cth) which was designed to provide temporary relief to businesses and stimulate economic activity. As touched on in our earlier article, this bill included a temporary COVID-19 safe harbour defence for directors from insolvent trading liability where ordinarily a director of a company in liquidation...

How are earnings multiples determined in business valuations?

When adopting the capitalisation of earnings methodology for valuing a business, a valuer must determine an appropriate multiple to apply to the future maintainable earnings of the business. The earnings multiple is designed to be a measure of risk. It assesses the riskiness of the maintainable earnings of the business and is typically described as the rate...

Understanding Goodwill

As noted in our previous article, when undertaking a business valuation, valuers are guided by common market practice and the valuation methodologies recommended in the ASIC Regulatory Guide 111. When adopting the Capitalisation of Earnings Methodology, it is not uncommon for the calculation to deviate from the business’ net operational business assets. In circumstances where the value...

Business Restructuring: What are my options?

GT Advisory & Consulting work with businesses across all stages of the business cycle by developing solutions to drive business turnaround, refocus strategic direction and fine tune business performance. Drawing on our in-depth industry expertise, we develop strategies which assist businesses navigate a diverse range of commercial challenges, by: developing in-depth restructuring and turnaround plans...

Valuation Methodologies: The Capitalisation of Earnings methodology

When undertaking a business valuation, valuers are guided by common market practice and the valuation methodologies recommended in the ASIC Regulatory Guide 111. There are a number of valuation methods which can be used to value a business and some of the more common methods include: The discounted cash flow method (Income-based Approach) The capitalisation...

Decoding the Illegal Phoenix: Part 2

In the previous article, I outlined the definition of phoenix activity. In this post, I will discuss the four key measures that were part of the Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019. Schedule 1 This measure introduced new phoenix offences to prohibit the creditor-defeating dispositions of company assets prior to a liquidation. This can...