Nowadays, a transparent and market-based business valuation that meets the expectations of the business partner is almost always a prerequisite for successful corporate purchase and sale transactions, and capital raise.
An objective assessment is also important for the business owners, as they get an idea of the purchase price they can expect during the sale, or the share price at which the capital investment is worth for them to be completed.
With the concept to triangulate a company’s value by looking at it from multiple angels, we use different valuation methods:
- The discounted cash-flow approach defines the company’s present value as the sum of the future free cash flow that the enterprise generates in the long run.
- The market-based, comparable multiples estimate the value by applying certain ratios (sales/EBITDA, P/E) resulted in recent transactions on the relevant market segment, involving similar companies.