Amortisation is the accounting and schedule of specific payments over a particular period of time. The meaning and application of this term is two-fold: in one, it refers to a schedule of fixed repayment (instalment) of the principal and interest of a loan over a given period of time; and in the other, it refers to the accounting practice of decreasing the value of assets to account for their declining worth over time. It is a non-cash expense that reduces a company’s tax burden.
Take for example a company that spent £100,000 on a patent that is set to expire in 10 years’ time: it amortises this expense by deducting £10,000 each year from its taxable income over the course of the 10 years.
In accounting, amortisation has the same meaning as depreciation; however, in practice, depreciation applies to tangible assets such as buildings, machinery and other equipment, whilst amortisation applies to intangible assets, such as patents, goodwill and brand equity.
Amortisation is important in a business sale because it is taken into account when using EBITDA (Earnings before interest, tax, depreciation and amortisation) in the multiplier method to determine the profitability and valuation of the business.« Back to Glossary Index
Explore the options available to you, improve your chances of successful sale.
If you’re seeking a business to buy, then we can increase your deal flow.
In the early stages of such an important undertaking, it can be a bit of a moral maze: who do you trust?
Firm Gains gave me confidence with detailed advice and support. I would recommend their services to other entrepreneurs seeking to buy a business.« Back to Glossary Index Mr T Washington , Founder
I found it much easier to get my head around a business sale this way than talking to my accountant. You speak a language I understand!
Even though the whole process of selling seems daunting, I’ve got more confidence that I’m heading in the right direction.« Back to Glossary Index Mrs T Boothe , Founder
Thank you for your email and the excellent advice provided earlier this week. It was immensely helpful and has helped me to plan my future direction for the practice.
I would have no problem whatsoever in recommending your services in the future.« Back to Glossary Index Mr & Mrs Halldron , Co-Owners
Firm Gains were recommended to me and I was not disappointed. They were efficient, helpful and effective responding quickly to my request with all the facts that were needed to ensure a stress-free dialogue with our buyer.
What really helped was the advice over and above the valuation, which was immensely valuable and gave me the confidence to proceed. I would not hesitate in recommending them.« Back to Glossary Index Mr C Waite , Founder
We found the advice invaluable, which was clear and concise and felt your firm had a good handle on market trends and business sectors.
With also the backup of the secondary services, there was a feeling you had all bases covered if we wanted to proceed with our exit via Management Buy Out (‘MBO’).« Back to Glossary Index Mr D Wills , Director
Thank you for your advice. I was just about to sign up to the wrong kind of business agent for a company of our size, but read your post just in time.
I found a more serious partner, with experience in our industry and we’re already using the same language.« Back to Glossary Index Mr F Summerscale , Managing Director
We have been greatly impressed by the clear and impartial advice given to us by Firm Gains. After just an initial phone call we felt much better informed, with a new awareness of the many options available to us.
Firm gains understood our situation quickly and clearly and were anything but ‘pushy’. Refreshing compared to what we’d experienced before.« Back to Glossary Index Mr C Hutcheson , Managing Director
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