What is Business Valuation?

Knowing what business is worth and what determines its value is prerequisite for intelligent decision making.

Business Valuation is the process of determining the “Economic Worth” of a Company based on certain assumptions and limiting conditions and subject to the data available on the valuation date.

Why to Obtain Business Valuation?

Business valuation is critical for strategic business decisions including fund raising, M&A, Sale of businesses , Strategic business decisions like Family or Shareholders disputes, Voluntary value assessment or may be just to comply with certain regulatory or accounting requirements under RBI, Income Tax, Companies Act, SEBI Laws etc. Better Corporate Governance is also leading to requirement of independent Business Valuations.

From Business Valuation, we adjust for Debt and Cash to arrive at value for Equity Shareholders.

While valuing convertible securities like CCD valuation, CCPS valuation, besides considering their rights regarding conversion ratio and timing thereof, their special rights like terms of coupon rate and other preferential rights like Buyback commitment etc. also needs adequate consideration.

Approaches and Methodologies for Business Valuation?

In business valuation, variety of business valuation methods typically categorized into three core Valuation approaches (Asset, Income and Market approaches) are considered and Premium & Discounts applied based on size and % of transaction under valuation to arrive at the Valuation for Shareholders.

Most treatises and court decisions encourage the valuer to consider more than one method, which must be reconciled with each other before arriving at a value conclusion.

Challenges for Business Valuer?

It may be noted that the business valuation of a company cannot be done scientifically and the real challenge for a Valuer lies in deciding which Valuation Approach and Methods to apply depending upon a number of factors like purpose, minority/ controlling interest, stage of business, financials, industry etc.

A lot of Qualitative aspects like Founders and Management, Corporate Governance and Transparency, Wealth creation initiatives like consistent Dividend Policy play a crucial role in Value assessment.

A business valuation is not just about number crunching. It is about understanding of the dynamics of the company and its business, Industry, Economy and allied aspects

Our Business Valuation Practice

We are a SEBI Registered (Cat-I) Merchant Banker and our dedicated valuation team with extensive valuation and cross industry experience will help you in quantifying the real worth of your business (uncoding tangibles & intangibles). We do a detailed analysis of the Company history and its business, Comparable Companies and similar Transactions for judging its business worth and deliver well-reasoned and defensive Business Valuation Report helping the Company and prospective investors in making informed business decisions. We have a specialized team which comes in a league of one of the best Business Valuation Services, Business Valuation Consultants having carried out more than 250 Business Valuations.