Business Valuation

What is the worth of your business for a possible strategic or financial opportunity.

A business valuation is the process of determining what your business is worth. Doing valuation is one part and convincing other party is another part. We take complete ownership of valuation we do and provide complete support to our clients to justify the valuation arrived at.

Our valuations help our clients in making informed investment and other business. Based on specific need of our client we help quantify and articulate value for transactions, investments, family settlements, taxation, litigation and strategic management purposes.

Key Elements determining business valuation –

  • Profitability
  • Working Capital
  • Owners involvement
  • Growth potential
  • Industry & Economy
  • Management capability
  • Uniqueness of business
  • Scale potential
  • Risk to a buyer

Our approach for valuation

  • Agree valuation objective and user segment
  • Define business entities and included assets being valued
  • Basis of value applied in the business valuation analysis
  • Market Analysis for valuation basis
  • Assumptions and limitations pertaining to business valuation
  • Valuation approaches and methods used
  • Valuation Modeling and Projections
  • Sensitivity and Risk analysis
  • Business value conclusion
  • Uniqueness of business
  • Scale potential
  • Risk to a buyer

Business valuations can be done using a variety of valuation methodologies. For the purpose of startup funding most popular method is discounted cash flow method (DCF).Discounted Cash Flows Method (‘DCF’) : DCF uses the future free cash flows of the company discounted by the firm’s weighted average cost of capital (the average cost of all the capital used in the business, including debt and equity), plus a risk factor measured by beta. Beta is an adjustment that uses historic data to measure the sensitivity of the company’s cash flow, for example, through business cycles. This means that companies in highly cyclical businesses will have a high beta to reflect the volatile nature of their cash flow. The DCF method is a strong valuation tool, as it concentrates on cash generation potential of a business. Business Plan for the purpose of this valuation shall be compiled by us based on client information and projections.

Another method used is Net asset value (NAV)
Net Asset Value Method (‘NAV’): The value arrived at under this approach will be based on the audited financial statements of the company and may be defined as “Shareholders’ Funds” or net assets owned by the company. The balance sheet values are adjusted for any contingent liabilities that are likely to materialise. The Net Asset Value is generally used as the minimum break-up value for the transaction since this methodology ignores the future return the assets can produce and is calculated using historical accounting data that does not reflect how much the business is worth to someone who may buy it as a going concern.

Based on requirements, one may use mix and match both the above methods to arrive at right value. There are other methods also for valuation and are used by us based on requirement of the client.

Who is this for

  • Wanted to know the value of business
  • Approaching to investor
  • Partnership issues
  • Selling the business
  • To determine the value of your shares

Time taken

Generally we take four to eight weeks depending upon the complexity of business

Deliverable

Valuation report with different models of valuation