Company valuation
Business Valuation
Business Valuation
Are you interested in your company’s true value, or do you have specific valuation questions? There are many reasons to determine enterprise value – whether you plan to sell or buy a stake, consider a restructuring, development, investment, or an IPO. In these cases, a professionally conducted valuation greatly supports sound decision-making.
A valuation exercise also provides valuable insight into the drivers of value and can equip decision-makers with useful – sometimes decisive – information on which strategic decisions can be based.
We tailor our valuation services to your individual needs. From the moment the idea arises, Central Audit’s team supports you with high-quality, accurate valuation advice, aligned with the purpose of the assessment.
For every valuation solution, we take into account the applicable laws and professional standards.
What does “valuation” mean in the context of determining company value?
For listed companies, estimating value is relatively straightforward: their shares trade daily and market prices are known. But where market information is not available to guide the assessment, other business valuation methods are required.
While most owners have a view of what their company is worth, there are times when a more precise assessment is necessary. How, then, can company value be determined as accurately as possible?
A company – or one of its divisions – can be valued in several ways. Considering corporate and market specifics, you may value the business on the basis of equity, hidden reserves on the balance sheet, historical and projected earnings, or the firm’s forecast future cash flows. In practice, company value can therefore be calculated using multiple methods.
The most widely used approach today: Discounted Cash Flow (DCF)
In current valuation practice, the Discounted Cash Flow (DCF) approach is the most prevalent. This method is based on the company’s future free cash flows, which are projected and then discounted to present value to determine enterprise value.
When Is a Company Valuation Needed?
Valuations are often performed only when a business faces a major change – such as an acquisition or the sale of an ownership stake. In reality, valuation goes far beyond transactions and can be an effective tool for forecasting future growth.
The most common reasons for a company valuation include:
- Preparing the business for sale
- Family matters: inheritance, divorce, succession, etc.
- Transfer pricing support/foundation
- Mergers and acquisitions
- Determining impairment/loss reserves
- Investment projects
- Disputes and litigation support
The Valuation Process
- Define the purpose of the valuation
- Gather information about the company and its market environment
- Collect additional data as needed and perform the financial analysis
- Determine the company’s value using appropriate methodologies
- Report and discuss the valuation and related findings
Conducting a robust valuation requires a clear understanding of the objective, the company’s current condition, and its operating environment, as well as access to reliable financial data. Assumptions and forward-looking projections typically have a material impact on the final value.
A thorough analysis of future forecasts and expectations is always part of the process. Beyond informing the valuation itself, this analysis is a powerful tool for turning the company’s long-term strategy into concrete financial plans. Combined with the valuation, financial planning can serve as an effective roadmap for the company’s future financial management.
Why Central Audit?
At Central Audit, client satisfaction is our foremost priority. We design our services to deliver the greatest possible added value for every client.
We are ready to meet bespoke business valuation needs as well. Contact the experts at Central Audit today to learn more about our valuation services.
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