WHY DO YOU NEED A VALUATION IF YOU ARE A SELLER?
The valuation is a negotiating tool which will act as a support to arguments within the negotiation, by creating effective and rational arguments.
1. It will allow you to know the true value range of your business.
2. It will help you to understand the strengths and weaknesses of your business, something especially important in the lead up to the sales process.
3. It will allow you to understand the variables which underpin the value and the impact that the synergies with the purchasing company will have on the value. If we negotiate well it will allow us to capture a large proportion of the value of these synergies.
WHY DO YOU NEED A VALUATION IF YOU ARE A BUYER?
If you are a buyer, you should not accept the seller’s valuation, you should do your own. It will help you to understand the company in depth and spot angles for negotiation.
1. Given that many sellers’ judgment of the value of their business is clouded by emotions, you will only be able to demonstrate its true value with a rigorous valuation.
2. To understand a business’s value it is important that you know how to diagnose its situation and the trend in its balance sheet.
3. Analyzing the company’s financial history will help you to see how the company has performed, its current state, and where it is heading.
4. You should study the cash flow and what is to be paid out over the coming months, so that you can adequately structure the offer.