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Based in Melbourne (Victoria) we deliver business valuations all over Australia using expert business valuers and resources that allow us to work remotely.

We have completed:

Contact Us

L3/162 Collins St, Melbourne, 3000

0421 069 717

m.williams@exitvalue.com.au 

Creative Industries Business Valuation

We consider the creative industries as including musicians, bands, artists, theatres, dance studios and the wide range of other businesses that support this sector.  This can include sound and lighting support, transport, artist management and many other traditional businesses.

The creative and arts industries are not known for buying and selling businesses, as often the commercial arrangements are associated directly with the artists and is somewhat difficult to transition from one owner to the next.

However even artists have a value that can be attached to the cash flows the artist, band or commercial arrangement generates.  It is just that these cash flows come with a high level of risk.

The valuations are often required to support entity restructuring, entrance and exit of partners and investors, resolving commercial disputes and in some cases supporting transactions.

Some of the issues that need to be considered in a business valuation in this sector include:

  • Ongoing commission arrangements and degree of following that supports the commission.

  • Legal agreements and ​arrangements.

  • Royalty agreements and payments

  • Recording patterns and cycles

A creative industries business valuation will focus on the risk of the commercial arrangements and cash flows in order to arrive at an appropriate value.

In many cases, the business valuation method used will follow net tangible assets where there is evidence that a commercial return is not generated.  The business valuation methods will also be aligned with the latest best practice IP valuation methods.

Key Industry Statistics

According to IBISWorld, the key statistics for the relevant industries include:

 

We have collated industry performance statistics based on ABS data and detailed them in a whitepaper, which can be downloaded from the link below.

What Makes a Business Highly Valuable?

SME Performance Whitepaper

Key Drivers of a Creative Industries Business Valuation

A creative industries business valuation is typically driven by key factors below that influence cash flows, which include:

  • Size of revenue and royalty rates

  • Level of following

  • Commercial agreements in place

  • Market segments and market awareness

EBITDA Margins are often negative (which results in asset methods used for business valuations or other IP valuation methods) to a high of 15% -25%.  In some cases a revenue multiple is more appropriate, which we consider to be equivalent to a market method as it relies on suitable comparable arragnements.

EBITDA Multiples for creative businesses will vary considerably across sub-sectors, and will be heavily influenced by level of revenue and profitability.  Typical EBITDA Multiple ranges we have observed are:

  • Revenue < $1m: 0.0x - 1.5x

  • Revenue $1m - $5m: 1.0x - 2.0x

  • Revenue $5m - $10m: 2.0x - 3.0x

  • Revenue $10m - $20m: 2.5x - 3.5x

Our Business Valuation Experience

Our creative industries business valuation experience has included including business valuations for:

  • Regionally located art and gallery

  • A number of rock bands

  • Artist managers​

  • Events management for entertainment sector

  • Digital marketing for entertainment sector

  • A range of different style dance studios based in Melbourne