Business Valuation

Want to sell your business? Planning to buy a business? Fears about finances? Want to secure the company’s stability?

Valuation is a solution for decision-making!!!

Business valuation is a process and a set of procedures used to estimate the economic value of a business, which is very useful when selling or purchasing an enterprise. Valuation is a valid decision-making solution by estimating the economic value of a business or an asset. Our commitment is to keep your financials and firmnesses undisturbed, by providing reliable and accurate valuation reports when selling or buying a business. Our commitment is to provide a reliable and accurate valuation report that helps you make the right decision.

Through a business valuation, a company’s inner structure can be reported. This will give a business estimate which helps the business investors to get a detailed analysis of their business. This analysis not only gives insights into the business capital but also the analysis of the investment philosophy and strategy. The analysis also includes the combination of market value and market price.

Here we consider assigning a current penny to the future investment which can only be done with a deep analysis of the scenario by understanding business entities, intellectual property, partnership interests in intangible assets, and other products. When considering assigning a current penny to the future investment, a deep analysis of different scenarios is a must. Understanding business entities, market value, income worth, partnership interests, and other factors which affect an asset value.

Investor Conclusions

Through a business valuation, a company’s inner structure can be reported. This will give a business estimate which helps the business investors to get a detailed analysis of their business. This analysis not only gives insights into the business capital but also the analysis of the investment philosophy and strategy. The analysis also includes the combination of market value and price value.

Few purposes for valuation:

Acquisition

Bankruptcy

Business Financial Modelling

Business strategic planning

Compliance/legal

Dispositions/selling and buying

Dispute resolution

Financial reporting

Impairment / Disposal of Long-Lived Assets

Inheritance

Insurance

Litigation resolution

The Merger of business or assets

Project development

Reorganisation

Secure Lending/Mortgage

Shareholder Value Optimisation

Taxation planning

Valuation Methodologies

Asset-based approaches

Total up the whole investments of the company for business valuation which is done in ways:

Reviews your company’s balance sheet, lists the business’ total assets and subtracts its total liabilities. Mostly considered for younger companies with limited financial histories. It is a fair market value of the business assets minus total liabilities on its balance sheet. Derived by subtracting the total liabilities of a company from its total assets.

Determines the liquidation or business value if all your assets were sold and liabilities were paid off. This is a common approach for business owners who are looking to sell their business or get out from under it. The Liquidation value is the net asset value discounted for a distressed sale. Investors and lenders may consider liquidation value for younger or potentially distressed companies.

This approach is well suitable for corporations, as all assets are owned by the company and are included in the sale of the business. This approach is not suitable for sole proprietorships as this is more difficult. If any assets belong to or are in the name of the sole proprietor, separating the value of business assets from their assets.

Earning value approaches

Evaluates based on the ability to produce wealth in the future. Generally for a company to buy or merge with another company through :

Reports the company’s usage of past earnings, normalizes them, then multiplies the expected normalized cash flows by a capitalization factor. This is the rate a reasonable purchaser would expect on their investment in the business.

Averages the trend of predicted future earnings for the company, then divides it by the same capitalization factor.

This approach gives a more accurate picture of the real value of a company since a company’s profits are a more reliable indicator of its financial success than sales revenue is. It also adjusts future profits against cash flow that could be invested at the current interest rate over the same period, i.e, by adjusting the P/E ratio to account for current interest rates.

Market value approaches

In this Business, value is estimated by comparing to the similar businesses that have recently been sold. This relative methodology will sometimes under-value or over-value the business. Calculated by multiplying the company’s share price by its total number of shares outstanding.

Times Revenue Method

A stream of revenues generated over a certain period which depends on the industry and economic environment is applied to a multiplier.

A combination of all the methodologies is the best choice. As an expert team, we carefully combine all the tricks to yield you the best output.