Business valuation – discover your company’s value
What does business valuation involve?
Company valuation is the process of determining a company’s market value – its assets, earnings, growth potential and market position. It is essential, for example, when selling a company, attracting an investor, making a contribution in kind to a company or restructuring.
A reliable business valuation takes into account not only financial data but also non-financial factors – such as the business model, know-how, market risks and brand value.
When is a business valuation needed?
A business valuation may be required or recommended in many situations, including:
- the sale of a company or an organised part of an enterprise,
- securing an investor or strategic partner,
- the division, merger or reorganisation of a company,
- contributing a business as an in-kind contribution to a capital company,
- disputes between shareholders (e.g. share buy-outs),
- valuation of assets for financial reporting purposes,
- planning succession or the sale of the business to a family member.
Who is a business valuation intended for?
A business valuation may be necessary for:
- business owners planning to sell, contribute or transfer their business,
- entrepreneurs who want to know the true value of their business,
- investors considering the acquisition of shares or a company,
- management boards and supervisory boards making strategic decisions,
- tax and legal advisers requiring a valuation for transactional or litigation purposes.
What does the business valuation process involve?
Our approach:
- Analysis of the company’s operations
We begin with a comprehensive review of the company:
– organisational structure and business model,
– business profile, operating segments,
– analysis of the market and competitive environment,
– identification of key factors influencing the company’s value.. - Review and analysis of financial data
At this stage, we analyse:
– balance sheets, profit and loss statements,
– cash flows,
– budgets and financial forecasts,
– historical performance and the volatility of revenues and costs. - Selection of the appropriate business valuation method
Depending on the purpose of the valuation (e.g. transaction, contribution in kind, report for an investor), we use:
– the income approach (DCF – discounted cash flow),– the asset-based method (net asset value),
– the comparative method (market multiples),
– mixed methods, where a multi-faceted approach is required. - Preparation of a company valuation report
The final stage involves preparing a report containing:
– detailed calculations and justifications,
– a description of the assumptions and methodology used,
– an estimate of the market or fair value of the company,
– a version of the report tailored to the purpose: transactional, tax, legal or accounting.
Why should you commission a business valuation from us?
We offer professional business valuations based on experience, proven methods and in-depth financial analysis. We support business owners, investors and advisers at every stage of the decision-making process.
- Many years of experience in business valuation – we value companies from various industries and at different stages of development, from startups to mature entities
- Reliable valuation methodology – every business valuation is based on recognised and proven approaches, in line with market standards
- A tailored approach to valuation – we select valuation methods appropriate to the objective: sale of the business, contribution in kind, succession, restructuring or dispute
- A team of experienced experts – valuations are carried out by MDDP’s financial experts, statutory auditors and tax advisers
- Transparent and useful valuation reports – prepared in a manner that is understandable to business owners, investors, auditors and financial institutions alike
Our valuations provide a reliable basis for business decisions, transaction negotiations and tax settlements.
Benefits of a professional business valuation
- Knowledge of the company’s true market value.
- A stronger position in negotiations with investors or buyers.
- Secure contribution of a business in kind to a company or investment fund.
- A basis for planning succession, division or sale of the business.
- Mitigation of tax and legal risks.
Our experience
We have valued companies in the following sectors:
- IT, e-commerce, logistics, manufacturing and services,
- family businesses, startups, limited liability companies and joint-stock companies,
- companies undergoing sale, succession or restructuring,
- entities planning contributions to newly established holding companies,
- capital groups requiring valuations for internal and tax purposes.
Our reports have been used by owners, investors, banks, auditors and tax authorities.
FAQ
What is business value?
Enterprise value is a numerically defined value of a company, determined using appropriate valuation methods, such as the asset-based, income-based or comparative approaches. Determining the value of a company is crucial in the context of a sale, in-kind contribution, merger or attracting an investor.
What does business valuation involve?
The value of a business is the monetary value assigned to a company at a specific point in time. It involves financial, market and strategic analysis, using clearly defined objectives, valuation standards and assumptions regarding future benefits, risks and financing structure.
What are the main business valuation methods?
The types of business valuation encompass three main approaches:
- Asset-based – based on the value of the company’s individual assets and liabilities.
- Income-based – uses cash flow forecasts and the company’s ability to generate profits in the future.
- Comparative (market) – based on an analysis of transactions involving similar companies and market indicators (so-called market multiples).
Who performs a business valuation?
Company valuations are usually carried out by:
- professional valuers or statutory auditors,
- consultancy firms specialising in valuations and financial analysis,
- financial experts who assist with transactions, corporate reorganisations, restructurings or litigation.
What does a business valuation include?
A comprehensive company valuation includes:
- a description of the purpose of the valuation and the assumptions made,
- a financial analysis (balance sheet, profit and loss statement, cash flow),
- a description of the methodology and valuation standards applied,
- a final report presenting the estimated value of the company and an expert’s commentary.
What is the purpose of a company valuation?
The purposes of company valuations can vary, including:
- transactions involving the purchase or sale of a company or part thereof,
- contribution of a business in kind to another entity,
- restructuring, demergers, mergers,
- attracting investors or obtaining financing,
- tax (e.g. transfer pricing), reporting or litigation purposes,
- succession planning, strategic management, assessment of management effectiveness.
Is a business valuation mandatory when selling a company?
It is not a formal requirement, but a business valuation is strongly recommended when selling a company. It allows the fair market value of the company to be determined, safeguards the interests of both parties to the transaction and increases the transparency of negotiations.
How long does a company valuation take?
The time required to prepare a valuation depends on the size and complexity of the company, the availability of data, and the purpose of the valuation. The typical process takes from a few days to several weeks.
What data is required for a company valuation?
To carry out a reliable company valuation, we need, among other things:
- financial statements for the last 2–3 years (balance sheet, profit and loss account, cash flow statement),
- data on the structure of assets and liabilities,
- information about the market and industry in which the company operates,
- financial forecasts (if available),
- a description of the business model and the company’s key resources.
What are the benefits of a business valuation before a sale?
Carrying out a valuation before selling a company offers many benefits:
- it enables the setting of a realistic transaction price,
- it enhances credibility with potential buyers,
- provides a strong argument in negotiations,
- it reduces the risk of misunderstandings or challenging the company’s value,
- ensures transparency for the parties involved in the sale.