How to evaluate a business
Video: 3 ways to value a company - MoneyWeek Investment Tutorials 2024, July
If it is necessary to calculate the value of a business or enterprise, a comprehensive assessment is carried out. Only knowing the value of the enterprise, you can make a balanced and informed decision on the sale or purchase of the rights of the owner. The value of a business is an expression of the results of its activities and reflects the actual position of the enterprise in the market.
Instruction manual
1
Evaluation of the business start by collecting the most complete information about the object to be evaluated. Data must be extremely reliable and documented.
2
The next stage is the analysis and study of the market niche within which the business operates. Pick a few successfully operating in the market of similar property complexes that can generate income.
3
Choose the approach and methodology for evaluating the business that is suitable for the goal and make the appropriate calculations. If your competence in this matter leaves much to be desired, seek the help of specialists in the field of assessing the success of enterprises, including specialized companies with experience in such assessments.
4
The main point in determining the value of a business is the deduction of the value attributable to a block of shares in an enterprise. Depending on the number of shares, the package may be majority, minority, controlling and blocking. Valuation of the company's shares consists in determining their value as a financial instrument, bringing profit to its owner. Profit can be derived from dividends or from the growth of the value of shares.
5
If different methodological approaches were used in evaluating the business, coordinate the results, bringing them to a common denominator.
6
The business assessment is completed by drawing up a corresponding report, which outlines the assessment procedure in a simple and accessible language. The report is accompanied by the documentary materials used in the business valuation, as well as expert conclusions regarding the value of the business. It is necessary to approach the preparation of the report responsibly, since this document can be used to protect one’s interests in litigation.
