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Get your business valued the right and fair way
Valuing a business is a complex combination of objective and subjective reasonings. Paloe provides an extensive, in-depth array of business valuation services, whether it’s for the entire business, the ownership interest in the business, or asset-based. We will ensure your business gets the most accurate and fair valuation using the main valuation methods and valuation analysis used by industry practitioners.
We are able to provide accurate enterprise value of the whole business or company
Business valuations are conducted for a number of reasons- usually when business owners plan to sell all or some of its operations, if they are planning to conduct any mergers and acquisitions activities with another company, for taxation purposes, or in some cases even divorce proceedings. The stage, size, and nature of the company can also have an effect on the business valuation. Smaller companies tend to sell at lower multiples than larger companies in the same industry. A company that is in the process of a buyout has a different enterprise value from a company that is in the process of a merger.
For business owners, comprehending and optimising the value of a business can be quite complicated. It involves multiple parties, different factors and a multitude of processes.
We will support your business in your journey to optimise and conduct your business valuation. We will be able to help create a fair process in the case of buyouts as well as help your business in dispute resolution or in creating leverage to have a more favourable deal in the case of mergers, acquisitions or fundraising.
At Paloe, our team has years of experience working with clients in multiple industries, assisting in business planning and business valuations. Our deep expertise in the corporate finance sector allows us to help clients of all types of businesses and sizes in any country or region in the world.
Business valuations are conducted for a number of reasons- usually when business owners plan to sell all or some of its operations, if they are planning to conduct any mergers and acquisitions activities with another company, for taxation purposes, or in some cases even divorce proceedings. The stage, size, and nature of the company can also have an effect on the business valuation. Smaller companies tend to sell at lower multiples than larger companies in the same industry. A company that is in the process of a buyout has a different enterprise value from a company that is in the process of a merger.
For business owners, comprehending and optimising the value of a business can be quite complicated. It involves multiple parties, different factors and a multitude of processes.
We will support your business in your journey to optimise and conduct your business valuation. We will be able to help create a fair process in the case of buyouts as well as help your business in dispute resolution or in creating leverage to have a more favourable deal in the case of mergers, acquisitions or fundraising.
At Paloe, our team has years of experience working with clients in multiple industries, assisting in business planning and business valuations. Our deep expertise in the corporate finance sector allows us to help clients of all types of businesses and sizes in any country or region in the world.
Here are some of the common reasons a business may want to get a valuation done.
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Janan Kwek, CEO
Here are some of the common reasons a business may want to get a valuation done.
Business valuation plays a key role in all merger and acquisition activities. It provides an objective range of values in which negotiation can commence. This has various implications from both buyer and seller perspective. A buyer will need to perform a company analysis and assess the value of a company in order to make an offer. Without an objective view of the value of the business, it may be difficult to assess any offer to purchase it.
Business valuation plays a key role in all merger and acquisition activities. It provides an objective range of values in which negotiation can commence. This has various implications from both buyer and seller perspective. A buyer will need to perform a company analysis and assess the value of a company in order to make an offer. Without an objective view of the value of the business, it may be difficult to assess any offer to purchase it.
Corporate restructuring may occur due to multiple reasons such as a change in economic or market trends, changes in corporate strategy, changes in ownership and more. No matter the situation, the company will need to be able to understand the value impact of the restructuring process. Corporate restructuring can involve many types of transactions, such as the sale or purchase of the business, formation of joint ventures, and more.
Corporate restructuring may occur due to multiple reasons such as a change in economic or market trends, changes in corporate strategy, changes in ownership and more. No matter the situation, the company will need to be able to understand the value impact of the restructuring process. Corporate restructuring can involve many types of transactions, such as the sale or purchase of the business, formation of joint ventures, and more.
Business valuation is also important for tax reporting purposes. The enterprise value of a business or company has to be found in order to assess the tax consequences. There are many situations where you need to conduct the business valuation for tax purposes, such as capital gains measurement, claiming of writing down allowances for intellectual property rights, changes in capital structure, changes in ownership and more.
Business valuation is also important for tax reporting purposes. The enterprise value of a business or company has to be found in order to assess the tax consequences. There are many situations where you need to conduct the business valuation for tax purposes, such as capital gains measurement, claiming of writing down allowances for intellectual property rights, changes in capital structure, changes in ownership and more.
It can be quite challenging for companies to get accurate and fair financial data. When preparing their financial statements, the financial information has to be measured at fair value. That is, the information has to use a more current value rather than using the historical value. This is where a business valuation is carried out, in situations such as the initial valuation of goodwill, impairment testing, reallocation of value to identifiable intangibles and more.
It can be quite challenging for companies to get accurate and fair financial data. When preparing their financial statements, the financial information has to be measured at fair value. That is, the information has to use a more current value rather than using the historical value. This is where a business valuation is carried out, in situations such as the initial valuation of goodwill, impairment testing, reallocation of value to identifiable intangibles and more.
To obtain financing, the important step is establishing a business valuation. Potential investors will require a valuation before making the decision to invest in the company or not. Having an accurate valuation for your company using various methods of valuation will help the business owner in the negotiation process and help both investors and owners come to an agreement.
To obtain financing, the important step is establishing a business valuation. Potential investors will require a valuation before making the decision to invest in the company or not. Having an accurate valuation for your company using various methods of valuation will help the business owner in the negotiation process and help both investors and owners come to an agreement.
Optimise your valuation
At Paloe, our team has years of experience working with clients in multiple industries, assisting in business planning and business valuations. Our deep expertise in the corporate finance sector allows us to help clients of all types of businesses and sizes in any country or region in the world.
The market valuation method establishes the valuation of a business by comparing it similar businesses that have been recently sold or acquired in the same industry sector. It includes a precedent transactions analysis. Observable data are collected for these businesses and then the adjustments are made to the data to compensate for any differences between those businesses and the subject being valued. This business valuation approach works best only if a business or company has sufficient market data on their competitors with recent sale data (current market value).
The market valuation method establishes the valuation of a business by comparing it similar businesses that have been recently sold or acquired in the same industry sector. It includes a precedent transactions analysis. Observable data are collected for these businesses and then the adjustments are made to the data to compensate for any differences between those businesses and the subject being valued. This business valuation approach works best only if a business or company has sufficient market data on their competitors with recent sale data (current market value).
Income methods are used to value a company based on the income-producing capabilities of a company, generally by analysing and looking at the company’s future cash flows. These are commonly used for valuing start-ups and other businesses with reasonably reliable forecast cash flows. There are two income-based valuation methods used when valuing a business.- Capitalization of Earnings Method and the Discounted Cash Flow Method.
Income methods are used to value a company based on the income-producing capabilities of a company, generally by analysing and looking at the company’s future cash flows. These are commonly used for valuing start-ups and other businesses with reasonably reliable forecast cash flows. There are two income-based valuation methods used when valuing a business.- Capitalization of Earnings Method and the Discounted Cash Flow Method.
An asset-based valuation method takes the book value of the individual assets of a company and deducts the liabilities, according to the balance sheet. Using this approach, the company is viewed as a set of assets and liabilities. As such, the value of the company comes as the excess of assets over liabilities in adjusted value terms. There are two ways to approach this business valuation process.
An asset-based valuation method takes the book value of the individual assets of a company and deducts the liabilities, according to the balance sheet. Using this approach, the company is viewed as a set of assets and liabilities. As such, the value of the company comes as the excess of assets over liabilities in adjusted value terms. There are two ways to approach this business valuation process.
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We will support your business in your journey to optimise and conduct your business valuation. We will be able to help create a fair process in the case of buyouts as well as help your business in dispute resolution or in creating leverage to have a more favourable deal in the case of mergers, acquisitions or fundraising.
What are other reasons that could a business may want to conduct a Business Valuation?
Litigation
Certain situations may deem it necessary for legal action to be conducted on the basis of damage claims and loss in value of a business. A business valuation conducted for litigation purposes include matters such as personal injury lawsuits, breach of contract, owner disputes, business interruption claims for insurance purposes, loss of business resulting from patent infringement, misrepresentation and more.
Shareholder disputes
It is not uncommon for there to be a dispute amongst shareholders. Common events that can trigger such situations can include mergers, sales or disposition of assets, diversion of income, breach of contract and more. As the parties involved are unlikely to be on friendly terms, such situations can call for a business valuer to come in to give an unbiased value of the business and specific shareholdings.
What are the two methods to the income approach?
Capitalisation of Earnings
The capitalisation of earnings valuation method is used in determining the value of a business by looking at their expected future value and current cash flow. It works best for stable companies with modest future growth expectations.
Discounted Cash Flow (DCF)
The Discounted Cash Flow method aims to determine the company’s ability to produce income during the company’s lifespan. Under the DCF valuation (or DCF analysis) approach, the definition of valuation is the present value of the projected future economic benefits plus the present value of its terminal value. To find the projected future cash flows of the company, they can conduct a DCF analysis by applying an appropriate discount rate, and from there they are able to convert the anticipated future earnings into a present value.
What are the two methods to the asset approach?
The asset approach can look at the company in two perspectives.
Under this method, the company valuation is conducted under the assumption that the company stays up and running and will not be selling any major assets.
This method determines the liquidation value (or net cash) under the assumption is that the business is finished and will be liquidating its assets and paying off their debts.
Are there any other business valuation methods other than the three main approaches?
Yes, there are other different methods of valuation used, though not as commonly utilised.
This valuation method is based upon the logic of the principle of substitution. This approach looks at what it will cost to ‘re-build’ the business. Not typically used in corporate finance, it is generally more commonly used in real estate or property valuation.
Under this approach, a company is valued by taking its current annual revenues and then applying a multiplier to it which varies depending on the industry and economy.
It is possible to provide a market value for a company using the stock price. It is calculated by simply multiplying the company’s share price by its total number of shares outstanding. However, the share price is based on the perceived value of the company which may not necessarily reflect the actual worth hence this can be an inaccurate method.
