Company Valuation

Company valuation is the process of determining the economic value of a business and providing its owners with an objective estimate of the company’s worth. Generally, company valuation takes place when an owner intends to sell all or part of their business, or merge with another company. Other reasons for seeking company valuation include determining whether you need debt or equity to expand your business, if you require a more comprehensive tax analysis, or if you plan to add shareholders. In the latter case, the value of the shares will also need to be determined.

The valuation process analyzes all aspects of the business, including its management, capital structure, future earnings, and the market value of its assets, to determine the company’s value in the current market conditions.

Valuation methods may vary based on the industry in which the company operates, the structure of the company, and the judgment of the valuation expert. However, some of the most common valuation methods include comparable company analysis, discounted cash flow models, and reviewing financial statements.