How to evaluate the value of the company

A gradual increase in the market value of the company, as well as an increase in the number of business purchase and sale transactions, leads to the need for more efficient asset management. In turn, this raises the question of the independence of business valuation. A cost estimate helps entrepreneurs correctly assess the value of a company before making a deal with it.

You will need

• - documents on movable and immovable property;

• - documents required for business valuation;

• - intellectual property documents.

Instruction manual

1

Using the list of necessary documents (information on the acquisition, rental of equipment, copies of technical expertise, etc.), evaluate the value of all movable property (machine tools, cars, equipment, production lines, office equipment, household items and other objects).

2

Perform an analysis of the value of real estate. To do this, use documents confirming the rights to the object, BTI documents, information about the boundaries of the object, information about the structures that are part of the object. Set the final cost of real estate taking into account the market value of a similar object and the cost of building a new object.

3

Using accounting reports for the last 3-5 years, the results of the last audit, information on intellectual property, as well as information on accounts payable and receivable, determine the value of securities, assets, intellectual property of the company.

4

Having summed up all the components (the value of movable and immovable property, intangible assets, shares, intellectual property, etc.), evaluate the total value of the company.

note

When choosing a methodology for assessing the value of an enterprise, it is necessary to be guided by the way the company makes profit. If the company makes a profit from the sale of goods and services, it is best to use the revenue approach. If the company is engaged in asset management, then to assess the cost you need to use a costly approach. The right choice of approach will avoid many mistakes.

Useful advice

When evaluating a company's value, it is best to start with a balance sheet. With this approach, the company will be valued at the amount of its net assets. Indeed, it is in the balance sheet that the fixed assets of the company with all available reserves, cash, debtors and other assets are taken into account.