Business Valuation Service
Business valuation is a systematic process of estimating the fair value of a business at a given time, using scientific approaches like discounted cash flow (DCF), and market and comparable valuation. Whether you are on the Buy or Sell-side of the table, understanding the fair value of the subject business is essential to protect your interest at all stages of the investment process. This value may be different in the eyes of one party compared to the other, which makes professional and independent corporate valuation a critical element of that investment process.
However, the fair value of a corporate business is not necessarily the same as the acquisition price, which is based on art factors like deal negotiations, and all other human-related factors. By combining both, the scientific approaches of business valuation along with non-scientific factors, investors can make sure that no money is left on the table, nor unnecessary cost is incurred. For further information about our business valuation service in Dubai or to receive a quote against your requirements, contact our team today.
Our Business Valuation Methods
Comparative / Market- Based Valuation
Comparable method of business valuation estimates the value of a corporate entity by looking at the performance of similar businesses. It is a widely used method and, if used correctly, is the most accurate of all available business valuation techniques. The only drawback of this method is that it’s not always easy to get the required competitor data.
In this method of business valuation, the total net value of a business entity is deducted from its liabilities to estimate its overall value. Assets can include properties, machinery, stock, along with intangible assets such as brand value. In short, asset-based valuation determines how much it would cost to rebuild a given company from scratch.
A popular method of business valuation that is widely used to estimate the worth of small-to-medium business entities. It is calculated by dividing the net profit made through a purchase by its purchase cost and then converting it into percentage. A higher ROI suggests a healthier business entity.
Discounted Cash Flow valuation method is for well-established businesses that have invested heavily in the past and boasts a stable cash flow record. Rather than the actual profit generated by the company, the DCF method looks at future cash flow projections. A discount rate considering factors such as market risk, inflation, and interest rate is applied to the estimated amount and then aggregated with the terminal value of the business to determine the overall value.
Multiples of Earnings
A method of business valuation commonly used by multinational businesses and those that are listed on the stock market. This method considers the Price/Earnings (P/E) ratio to determine the overall value of the business entity.
Why is Up-to-date Business Evaluation a Necessity?
Business evaluation not only helps to determine the overall economic value of a corporate business entity, but it also helps to ensure that business objectives are met and identify weaknesses to be rectified. The basic premise of business valuation revolves around how much profit a buyer can make by considering the associated risks involved in the business. Listed below are some of the key reasons as to why up-to-date business valuation is a necessity:
To Buy/Sell a Business
Whether you are a buyer or a seller, it is incredibly challenging to put a price against a business. More often than not, what you might think a business is worth is entirely different from the figure offered by the second party. By estimating the overall value of the company through a proven evaluation technique, both the buyer and seller can clearly understand what’s at stake.
To Raise Capital
Irrespective of the business entity in question, all businesses do require additional funding at some point. Equity capital raising is the phenomenon by which a company sells more shares to either its current investors or new ones. Under such cases, business evaluation is a necessity as it helps potential investors to clearly understand the economic worth of your organization and make a more educated decision.
To Measure Management Performance
As mentioned, business valuation is not merely a tool to put a monetary value against a business. It also helps to measure management performance and also identifies areas where management needs to focus on and where a change is required.