All about Valuation Reports:
A Company Valuation Report analyses the real worth of your company and its assets as per the going market rate , industry standards and economic shifts. An appraisal from time to time helps one get an overall picture of how is the market being affected through your business and vice versa. Knowing the area that your company has reached, the area where there is still scope of development by way of acquiring market is all pertinent for calculating profit and figuring out loopholes. It helps you to mark the areas which need business expansion and contraction.
Benefits of having a Company Valuation Report:
Gaining Investors
Every business needs investors for fund raising and growth. A thorough Investment report is often asked by the investors to understand their return on investment for a given business. The profits if exceed losses, which is verified through figures in the report, the investment appears profitable thereby making the investor keen on investing in the given business idea. Appraisal requires accurate computation of data which can be achieved through experienced individuals only.
An accurate valuation report lays down the path for able investors in the market to approach your business.
Determination of Assets and Liabilities
A good evaluation report helps in assessing the market value of those assets incase any resale is on the mind of the business owner. Assessing the assets and liabilities also helps in determining the growth of the company in past years. Once your assets are valued, you may think of new ways to increase their valuation which in turn would make your company invaluable in coming years.
Resale Value
Determining the assets and liabilities of a company also helps in determining it’s resale value which is beneficial in the long run as no one will be able to purchase your company at an undervalued price and you will not be the one on the loss side.
Litigation and M&A
It is helpful even in the case of new Mergers and Acquisitions as the assessment of assets and liabilities paint a diagram of figures as to whether the said merger or acquisition will be profitable in near future or would incur losses. In the event when the company undergoes litigation process, the lawyers often need exact figures for determining relief and compensation amount. One can ascertain the loss suffered only if they know the value of the goods in reality. A poor assessment report may lead to undervaluation of losses.
Few of the Approaches for making Company Valuation Reports
There are several approaches of making a Company Valuation Report.
Some of these are:
1. Earnings/ Income approach - Calculated through earnings of the business within a specific time period.
2. Cost Approach - Calculated through estimating the price a buyer should pay for a purchase , equal to the cost to make an equivalent purchase. The depreciation value is determined in this approach
3. MV approach - Calculated through share valuation over a period of time, where average pricing of the share is considered.
4. Market approach - Calculated through determining the value of an asset based on the selling price of similar assets, for instance a company of similar nature been sold in the recent times is taken as point of reference.
5. NAV approach - Calculated through determining the asset and liabilities of the company over a period of time.
6. DCF approach -Calculated on the basis of discounted future cash flow statement of the company.
Let the Expert decide with your consent the best method suited for your company. You can also use multiple methods for arriving at a conclusion based on your needs!
