Company evaluation – everything worth knowing shortly
Business valuation – The business valuation is concerned with a valuation of a company as a whole or of shares of the object. It is an important stock of corporate finance matters. What a company really is worth depends on whether the company is for sale, shares are to be sold for profit or, for example, investors want to participate favorably and cheaply in the company.
Thus, the valuation of the company is not just in the classic case in business valuation
Company sale carried out. In addition to an objective view of the company, subjective and functional evaluation approaches also have to be taken into account, so that a large number of evaluation purposes can be identified. Depending on the individual evaluation occasion, different methods of a Firm use evaluation.
It should be noted that in most cases it is a highly complex process of valuation, which requires specialized advice on corporate finance matters.
When does the
valuation of a company become necessary?
Most changes in ownership lead to the need to evaluate a company. These are so-called transaction-related reasons for an object valuation. Not only when a company sale is imminent, the valuation of the company is carried out. As an example, the company could face a change of shareholders or the exclusion of shareholders. The company could also face an IPO. In the other extreme example, the company faces insolvency proceedings or has become part of an inheritance dispute. These examples show different evaluations
events that require a compelling valuation of the company.
Company sales valuation
There may also be non-transactional reasons. Does the creditworthiness have to be checked or is there a lease o. Ä. before? A common reason is also the necessary identification of the
Taxable basis of the company.
Which methods of company valuation are available?
There are occasional assessment procedures, which can be broken down into three main methods. In addition to the individual evaluation of the company, an overall assessment procedure or a so-called mixing procedure can also be used.
In the individual valuation procedure, any assets of the company are valued individually and the respective enterprise value is determined by means of gross assets and debts. It also includes tangible assets of material nature, such as inventory and technology. Depending on the continuing management or immediate liquidation of the company, the net asset value method with reproduction values or liquidation values is used to determine the value. The net asset value method is characterized by the fact that no forecasts are necessary.
When using the overall evaluation procedure, the considered company is regarded as an economically uniform object and evaluated. On the one hand, multiplier methods can be used that determine the value of the object based on comparisons with equivalent companies or transactions. The valuation is thus market value oriented. On the other hand, so-called investment-theoretical methods can be used. They determine the earnings value of the company by discounting the financial surplus. They also take into account different capital costs under the name discounted cash flow and carry out a cash value calculation of future financial surpluses. Accordingly, capital value orientation is analyzed. The discounted cash flow method is also known as the net present value method and is a frequently used method. To determine the operating value, a future-oriented profit and loss account is necessary.
The blending method uses a combination of an individual and overall company valuation. Thus, not only the intrinsic value, but also the future earnings value is used for the valuation. It is a standardized method, which has proved particularly useful in the evaluation of small and medium-sized enterprises.
Of course, the tax perspective is also important.
There is no uniform, legally binding basis for company valuation. The valuation method used ultimately depends on the purpose of the valuation, the size of the company and the market. Depending on the status and interests, the value of the company may not only vary in relation to the employees, so that the price, for example for the sale or purchase of a company, must be negotiated in detail.
Value terms, functions, evaluation occasions