Business Valuation Services
We value companies as well as individual projects using multiple valuation methods. Valuation assists companies during mergers, acquisitions, private equity deals, employee stock option schemes as well as project feasibility studies.
Types of Valuation
There are different ways to value a business or company. The most elegant method uses multiple valuation methods often with weights attached to a particular valuation method.
Different methods can (and usually will) provide slightly different results. This is nothing to get alarmed at. Depending on the nature of the company, industry and current market scenario the appropriate valuation method(s) can be selected.
DCF Method
This valuation method is perhaps the one that is technically the finest. It is based on the premise that the value of a business or project is equal to the discounted cash flows that are available to equity holders. The difficulties that arise with this valuation method are largely ones related to assumptions of discount rates and the terminal values that are assigned.
Multiples Method
This valuation method is usually the easiest and quickest way to value a company. It compares multiples such as PE (Price Earning) & EBITDA (Earnings before Interest, Tax, Depreciation and Amortization) ratio with the ratios of other listed companies. At the heart of it this method implies that 'similar companies in similar industries and markets should have similar multiples'.
Other Methods
Various other valuation methods exist which include asset value, replacement cost, comparison with market transactions etc.
Articles
Read an interesting article on Price vs. Value