The purpose of a valuation
The purpose of a valuation is to arrive at an expected market value for the company (shares). The accounting team has extensive experience in assisting with the valuation of smaller transactions to be used in connection with sales, demergers and mergers.
What a company should be valued at is not an exact science and, in the same way as with house or cottage sales, it is often the market that decides. The value you think is correct one year can, for various reasons such as industry, scarcity, green shift, changes in the market, employees, etc. affect this in a positive or negative direction the following year. The value that emerges in excess of the company's book value is referred to as goodwill/intangible asset/additional value. Conversely, negative goodwill is called badwill, which is rare.
Key figures in the company provide good indicators of value:
- Average of sales figures for the last few years
- Average operating profit in recent years (EBIT = earnings before interest and tax)
- Average EBITDA (earnings before interest, tax, depreciation and amortization) in recent years
- Required return on equity
If you need an assessment of the value of your company, just get in touch.
