Business valuation

Business and business valuation

Business valuation services

An experienced appraiser knows how to recognize value

A evaluation business and business is a methodology that aims at assessing the value of a particular entity, be it commercial, industrial, services or investments.

There are many different models and techniques, with more or less complexity, for the calculation of the value of the company, but the complexity lies in the assessment of the subjective values. The value of a firm is ultimately the balance between what the seller accepts as the price (against all the alternatives available to him) and what the buyer is willing to pay, which may include, in addition to the market value expected Goodwill involved in the acquisition.

To evaluate means estimating or estimating the value of a certain thing. This is undoubtedly a rather linear process, since it depends on several constraints, some of them very subjective, such as: the characteristics of the appraiser, the purpose of the evaluation (purchase, sale, merger, liquidation), the economic, social context and the policy in which the evaluation is carried out, as well as the existing variables and evaluation models.

How much is a company worth?

Value is not price; price is what you pay; the value is, objectively, how much it is worth.

 
The basics of business valuation focus on three approaches:
  • Approach to assets - considers the value of assets, less liabilities;
  • Market approach - Consider the market value of listed companies or multiple recent transactions for similar companies;
  • Income approach - Consider the value of future earnings, updated to current value.

 

The value of a company is far from being an exact science because the risks that involve it are not static.

 

Defining the value of a company / business is a complex process that requires a lot of experience and is conditioned by different variables:

  • Marketplace;
  • Competition;
  • Family situation;
  • Synergies;
  • Business power;
  • Control;
  • Management capacity.
When investing, a buyer wants their investment to return between 5 and 10 years. Therefore, the company has to release an annual income of about 10 to 20% and with a low risk. Compare with alternative low-risk banking application is often used scenario.
 
In order to properly evaluate technical studies for different purposes, these are the support for the entrepreneur measure his own performance and assess risks in order to increase the value of the company and consequently their assets.
 
Evaluation is a procedure that starts with a data collection and a small objective audit of the company. Thereafter, the necessary financial studies and projections are carried out. This work results in the "Evaluation report", a document signed by technicians who thus attest to its suitability.
 
This "Award" is highly important for drawing up a "Business Plan" and is a decisive instrument for the sale of the company, because it allows to negotiate the company in a simpler way and allows a more strategic and immediate vision for making decisions. On the other hand, it is particularly valuable for the entrepreneur who can, with him, contemplate and evaluate his "life project" of a realistic way.