Thorough (meaning - the most objective) business valuation is possible with a deep and comprehensive analysis of both the current position of the business itself and the external environment in which it operates.
Rating midsize companies is often demanded by the business owners at the time of assets division between several partners or at the beginning of negotiations for the entire project sale. In this case, no matter how renowned the consulting company conducting the assessment is, and no matter how carefully the calculations are performed, the transaction takes place only with the consent of the two parties based primarily on the personal (subjective) attitude to the asset and readiness for a specific pattern of calculations performance. In our view, along with a thorough assessment report, to achieve a practical result (transaction) negotiation process moderation is equally important providing evaluation transparency for both parties and consideration of each party’s subjective interests.
Market value is the estimated amount for which assets would be exchanged on the Date of valuation between a willing buyer and a willing seller in a commercial transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.
In practice, we have observed a lot of cases where the parties intending to conduct the sale of the business agreed to refer to the valuation of known consulting companies. The valuation was conducted but the transaction was not performed in the result. Costs incurred for consulting services were ineffective. The reason in each case was unrealistic and often irresponsible appraisers’ attitude concerning the actions of each of the investors in the forecast period. Emphasized appraisers’ neutrality behind the mask of a known consulting company’s brand also brought chill in the course of such projects. We try to avoid such an outcome with our involvement as we value primarily the real practical result of any work.
Business valuation can also be performed irrespective of the intentions of purchase/sale of the asset by the owners orienting their management accounting on value-based approach and building a system of analysis when thorough valuation of the business is monitored regularly. Building a model for your business allowing performing such an analysis on a regular basis can also be our task.
Contents of the business valuation report:
- Description of cost analysis methodology. General overview of valuation methods used. A more detailed examination of the methods chosen for your project;
- A description of the current state of the industry in question. Macroeconomic situation overview at the time of cost analysis;
- Description of the company, its history, existing businesses;
- Financial analysis of the current state of business (analysis of accounting and provided management data);
- Forecasts of the prospects for further functioning of the company. Data on valuation calculations;
- Conclusion on the value of the analysis object.