Do you want to know the value of your company?
ONEtoONE understands that company valuation is a fundamental negotiation tool in a corporate transaction. We must show both the value created in the past as well as the company´s potential future value.
Having a good and robust valuation is useful in order to gain a thorough understanding of the variables that determine the value of a company as well as the impact that the improvement or deterioration of these variables could have on the value. Preparing a valuation report is fundamental in the preparation of a good negotiation and in order to maximise the price with logical, technical and objective numerical arguments.
VALUE
DISCOVER THE REAL VALUE OF YOUR COMPANY
PRICE
OBTAIN THE HIGHEST POSSIBLE PRICE IN A TRANSACTION
OPTIMISATION
IDENTIFY ALL AREAS FOR IMPROVEMENT
The purpose of company valuation
Company valuation is not an isolated service. Information is power and, whether you are considering a corporate operation or just want to know how your company is performing, it will be of great use. You can use it to assess the state of your company, but it can also be the first step towards growth, expansion or sale. Find out what opportunities valuation offers you.
VALUATION FOR BUY-SIDE
- Help make an informed decision, considering assets, revenues, cash flow and market prospects.
- Identify the risks and opportunities of future growth.
- Secure the necessary financing.
- Protect the buyer from potential legal problems they could face in the future.
VALUATION FOR SELL-SIDE
- Obtain an objective base for determining value and avoid underevaluation.
- Maximise company value to achieve the best possible price.
- Attract the best buyers and most competitive offers.
- Accelerate the sales process, negotiate with greater confidence.
VALUATION FOR RAISING CAPITAL
- Demonstrate the company value.
- Increase the chance of success in the search for financing.
- Generate confidence in the company and its growth potential.
- Attract the investors that are best suited to the company and its financing needs.
Most frequently asked questions about company valuation
WHAT IS A VALUATION?
A valuation is a technical process with the objective of quantifying the assets that make up a company´s equity, its competitive position within its sector and its potential to generate income. It requires extensive financial knowledge; its necessary to know the company´s business model, the components that create value and understanding of the market and sector in which it operates.
WHAT IS THE PURPOSE OF COMPANY VALUATION?
Valuation has numerous objectives and uses: firstly, it attempts to calculate the real value of a company. But it is also able to provide arguments to justify the selling price of a transaction, identify areas for improvement within the company´s strategy or organisation, or detect areas of potential growth within the sector.
WHO IS INTERESTED IN CARRYING OUT A VALUATION?
In the context of a corporate transaction, it may be desirable for both the buyer and the seller to have a strong and reliable valuation.
Value is not independent; it always contains subjective aspects, regardless of the valuation method used. Considering the real value will help to approach the negotiation from more interesting angles.
Both parties will be able to defend their valuation and the fairest price agreement will be reached.
WHO CAN CARRY OUT A VALUATION?
A valuation is not an audit. It does not involve an assessment of financial statements, but is based on figures provided that are considered to be valid. Although, in principle, anyone with accounting and financial knowledge could perform this task, only a qualified and specialised professional can apply the specific valuation method required for each company. Furthermore, they will know how to interpret the results most correctly and advantageously.
This is important not only for the negotiation of any corporate transaction, but also in the event of litigation. A specialist advisor is able to defend the value that emerges from a valuation with solid arguments and from a technical point of view.
WHAT TYPES OF VALUATION ARE THERE?
There are various methods of calculating how much a company is worth. Some of which only take into account the value of the company´s assets, limiting the insight into the company´s value. There are other, more comprehensive methods such as, the discounted cash flow method and the comparable companies method.
If you want further detail, we explain further in detail in our article on the business valuation process.
ARE VALUE AND PRICE THE SAME?
In the buying process, the buyer and seller can find it difficult to agree on a price. This happens because the value is perceived differently by each party.
Due to the concept of subjective value, many sellers price their companies based on their attachment to them. This means they enter into a negotiation on the basis of emotional prices. A buyer obviously does not share this perspective.
It is also common to believe, for example, that if turnover is high, the company will be worth a lot. However, this is not necessarily the case. The value of a company depends on other material and potential factors that only a professional valuation can reveal.
Only a thorough valuation can demonstrate the true value of a company to both buyer and seller and help to reach a middle ground in establishing the price and terms of a transaction.
WHY IS THE BUYER INTERESTED IN THE COMPANY VALUATION?
Buyers risk their capital in the purchase of a company, so they need to know the sources of value. A good valuation helps them to understand the company, the synergies and identify the best angles for negotiation.
A good valuation helps the buyer understand the company´s future growth potential. Analysing its financial and non-financial history will help to see what the company has been, its true current situation and the value creation possibilities it contains.
It will also take into account the cash flow and true cash needs for the coming months, so they can appropriately structure an offer and avoid surprises.
AS A SELLER, DO YOU NEED TO HAVE A VALUATION?
If you are considering selling or raising capital, whether you need to attract resources or are expanding, a valuation is a weapon in preparing a good negotiation with the other party.
First and foremost, it will allow you to understand the true target value range of your company. It will help you understand the strengths and weaknesses of the company, which is especially important to prepare the company before starting a sale process. You will be able to prepare it for sale, to optimise its value and therefore, achieve the best price possible.
The valuation will also allow you to understand the variables that determine the value and the impact of synergies with the buyer´s company on the value. If we can negotiate well it allows us to secure most of the value from these synergies.
An investor is looking for a return on their investment. A good valuation is based on the growth of the company and its value and potential, and will help facilitate the negotiation, arguing and justifying the asking price for the investment.
Related articles
If you want to delve deeper into the topic of valuation, don´t hesitate to consult the wide variety of articles available on the ONEtoONE Blog. Ease all your doubts.
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