- Address : M-15, Al Andalus Building, 1st Street, Hor Al Anz East, Deira, P.O.Box: 85962, Dubai – United Arab Emirates.
- sales@hawk-me.com
- +971 50 599 3452
There are many reasons why a business owner or company needs to know the value of a business – to sell or buy a business, settlement on litigation, capital restructuring, expansion of business, etc.
Business valuation demands high-level financial analysis that should be undertaken by a qualified valuation professional with the appropriate credentials. Business owners who seek a low-cost business valuation are seriously missing out on the important benefits received from a comprehensive valuation analysis and valuation report performed by a valuation expert. These benefits help business owners negotiate a strategic sale of their business to get a fair price, minimize the financial risk of the management in litigation, etc.
Business valuation refers to the process of determining the current worth of a company and there are many techniques used to determine value. The typical standard of value utilized is fair market value. The fair market value is the price at which a business would change hands between an independent buyer and seller having the requisite knowledge and facts, not under any undue influence, and having access to all of the information to make an informed decision. An analyst placing a value on a company looks at the company’s management, the composition of its capital structure, the prospect of future earnings, and the market value of assets, etc.
It’s a common misperception to say that the company is worth these many times EBITDA (earnings before interest, taxes, depreciation, and amortization) simply, as that doesn’t take into consideration the industry, business risks, cash flow expectation, debt, and more. So, it is always advisable to do the business valuation by a valuation expert. Not knowing the actual fair market value of the business could cause the business owner to sell the business for a lesser price or buy a business at a high price than it actually worth. For these reasons, the cost to do the business valuation can be an excellent investment. Sometimes it may be savings in millions by paying the right price or by taking the right decision not to invest in an unworthy business.
Business Valuation Services in Dubai,UAE
Call for Consultation HAWK Consultant | Partner Mob: 0505993452 Email: sales@hawk-me.com
While there are numerous valuation models and metrics around, there are only three valuation approaches:
It relates the value of an asset to its intrinsic characteristics: its capacity to generate cash flows and the risk in the cash flows. In its most common form, intrinsic value is computed with a discounted cash flow valuation, with the value of an asset being the present value of expected future cashflows on that asset – in cases where cash flows are more predictive in the business.
It estimates the value of an asset by looking at the pricing of ‘comparable’ assets relative to a common variable like earnings, cashflows, book value or sales.
It uses option pricing models to measure the value of assets that share option characteristics.
There are three fundamental ways and other methods to measure the value of a business practice based on the above three approaches:
The business valuation methods under the Asset Approach include:
The business valuation methods under the Market Approach are:
The Income Approach to business valuation uses the economic principle of expectation to determine the value of a business. To do so, one estimates the future returns the business owners can expect to receive from the subject business. These returns are then matched against the risk associated with receiving them fully and on time.
The returns are estimated as either a single value or a stream of income expected to be received by the business owners in the future. The risk is then quantified by means of the so-called capitalization or discount rates.
The methods which rely upon a single measure of business earnings are referred to as direct capitalization methods. Those methods that utilize a stream of income are known as the discounting methods. The discounting methods account for the time value of money directly and determine the value of the business enterprise as the present value of the projected income stream.
The methods under the Income Approach include:
There are some other methods of business valuation which are as follows:
People usually ask
Business value can be arrived at by using various methods depending upon the nature of the business being valued. There are different business valuation methods like Net asset vale method, the Liquidation value method, valuation based on future profitability, etc.
The business consultant will be having expertise in the field of business valuation. So to determine a reasonable value for the subject business, he/she can use his /her subject expertise, hence the seller or buyer of the business will be benefitted out of it.
News & Articles
June 22, 2021
Customs Duty in the UAE Goods imported into a country are subject to customs tax or Customs Duty specified in the Customs tariff and are collected at the first point of entry…
To ensure clients progress financially and socially.