Is a valuation an objective search for "true" value? Does a good valuation provide a precise estimate of value? The more quantitative a model, the better the valuation?
5 steps to consider when valuing a business.
However valuable you estimate your business to be, it will only be worth what somebody is willing to pay for it. So, valuation skills are of crucial importance to ensure that you get this right. CREDIBILITY of the numbers and the UNDERSTANDING of the techniques is KEY to obtain the price and to negotiate effectively.
1. The future financial Performance: What are the projected profits and cash flow? How well have costs been controlled to date? When valuing a business, it will be important to consider any capital expenditure that has been planned for or will be needed in the future. Future profitability is obviously of the utmost importance.
2. Assets and Liabilities, start-ups, and service companies: If you add up all the assets, take away the liabilities then you are left with the asset valuation. What about start-up and service companies? Does the lack of assets reflect the companies worth? If not which techniques to employ.
3. Intangibles Assets: What is the worth of these intangible assets? This is sometimes one of the major considerations when valuing a business. It includes considering the strength or weaknesses of the customer base, brands, loyalty, and accounting intangible assets.
4. People/Staff: When valuing a business, the current management structure is of critical importance for potential buyers. This also includes the knowledge of what type of involvement that you, as the owner, may have in the running of the business. There may be economies of scale that result in a reduction of staff. How to calculate them?
5. Factors outside the business (The changing world, the industry, and the competition): The state of the economy, the financial markets, the competition, and the potential growth at the time of selling is of critical importance.
The valuation course and the learning outcome.
This 2-day course provides real hands-on experience in today’s most widely used corporate valuation methods and uses. It looks at potential problems by going beyond the fundamentals of corporate valuation, while equipping you with the latest strategies to help you successfully tackle any valuation, however complex.
Understanding the value of your company allows you to maximise its potential, increase returns, improve project selection, funding alternatives, compare competitors, and decide on mergers and acquisitions.
We learn to use:
- The different corporate valuation techniques
- Book based and adjusted value
- Market multiples
- The Discounted Cash Flow method (DCF)
- Qualitative factors affecting valuations
- The impact of the capital structure on valuation
- Decide which valuation techniques you can use to your maximum advantage
- Value companies for mergers, acquisitions, privatization, and new issues
- Quantify and deal with the risks associated with corporate valuation
- Fully understanding the critical importance of the cost of capital
- The implications of the terminal value and market multiples.
You will learn to decide which valuation techniques you can use to your maximum advantage. Value companies for mergers, acquisitions, privatization, and new issues and quantify and deal with the risks associated with corporate valuation.
A solid case study is used throughout the course, developing your understanding step by step, enabling you to select the best methods of valuation upon completion.
This course is applicable to anybody who wishes to assess the value of an organisation either from the point of view of an investor or internally responsible for making decisions to divest, merge, demerge or acquire an organisation. Typical professions are business owners and managers, valuators, investment bankers, fund managers, equity analysts, finance consultants, equity traders, equity salespeople, corporate finance lawyers, credit analysts, strategists, treasurers, and compliance officers.
Course format (Residential and Online)
Besides the course materials provided on the day, all course resources are available online, including audio and video material from industry experts.
Practice-based learning and critical engagement is a key theme through all our courses allowing delegates to acquire the needed skills and techniques to be applied as soon as they are learned and developed.