At the most elementary level, business valuation is the procedure where the economic value of a company is determined. There are various methods for business valuation to determine the worthiness of a small business. Vedicology Family Business Advisors utilize different Methods for Business Valuation to measure the value of a business. Still, generally, each method will require a full and objective assessment of every piece of your company. This being said, company valuation calculations usually incorporate the worth of your equipment, stock, property, liquid resources, and anything else of economic value that your company owns. Other factors which may come into play are the management structure, projected earnings, share price, revenue, and much more.
Why Business Valuation?
Due to the complexity involved in the company evaluation procedure, these calculations are likely not something you’ll be doing every day–thus, when would you need a business valuation?
Overall, there are several common reasons why business owners will need to assess the worth of the company:
- When looking to sell your company
- While looking to merge or acquire another company
- When looking for company financing or investors
- Establishing spouse ownership percentages
- When adding shareholders
- For divorce proceedings
- For certain tax purposes
Ultimately, different business valuation methods will be preferable in various situations. Generally, the best approach will depend on the reason why the company needs evaluation, the size of your organization, your business, and other aspects.
As an example, in a sale situation, the majority of small private companies are sold as asset sales. In contrast, the vast majority of middle-market transactions involve the sale of equity. So each of these sales would require a different business valuation method.
Methods for Business Valuation
Vedicology Family Business Advisors utilize different Methods for Business Valuation to measure the value of a business, including accurately.
- Discounted Cash Flow Analysis
- Net Present Value and Internal Rate of Return Analysis
- Free Cash Flow to Equity Valuation
- Free Cash Flow to Firm Valuation
- Leveraged Buyout Valuation
- Synergy Valuation
- Weighted Average Cost of Capital Valuation
- Cash Flow Valuation
Fairness Opinions
We offer a company’s professional evaluations to determine whether a merger, acquisition, buyback, spin-off, or buyout is an appropriate and viable option for that company. These services include valuation analysis of a target company, evaluation of business rationale of a transaction, and opinion as to the legal fairness of the proposed transaction.
In developing fairness opinion, we determine whether a merger, acquisition, buyback, spin-off, or buyout is an appropriate and viable option for both / either buyer and seller. This process involves interviewing key management and key company advisors, visiting the company’s facilities, analyzing financial statements, reviewing transaction documents, and researching and understanding trends within the industry to evaluate the company properly.
Our fairness opinion service offering assists directors, investors, trustees, and board members of a company in gaining clarity into the soundness of a deal. We make transparent the level of care and value a third party has provided to shareholders about the financial fairness of a pending transaction.
Our fairness opinion process includes the following components:
- Valuation analysis of a target company as well as alternative companies
- Evaluation of the business rationale to proceed with the proposed transaction
- Opinion as to the legal fairness of the proposed transaction
Our valuation team present the fairness opinion as a professionally formatted research report that a board of directors or controlling shareholders of a target company can use to approve the proposed transaction.
