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What is Business Valuation?

Business Valuation is the process of determining the economic value of a business or company. <br>

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What is Business Valuation?

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  1. BUSINESS VALUATION

  2. What is business valuation The process of determining the economic value of a business or company. Business valuation can be used to determine the fair value of a business for a variety of reasons, including sale value, establishing partner ownership and divorce proceedings. Often times, owners will turn to professional business valuators for an objective estimate of the business value.

  3. Components of Business Value • Shareholder Value • Customer Value • Employee knowledge • Channel Partner Value • Supplier Value • Managerial Value • Societal Value

  4. Shareholder Value For a publicly traded company, shareholder value is the part of its capitalization that is equity as opposed to long-term debt. In the case of only one type of stock, this would roughly be the number of outstanding shares times current share price. Things like dividends augment shareholder value while issuing of shares (stock options) lower it. This shareholder value added should be compared to average/required increase in value, also known as cost of capital. For a privately held company, the value of the firm after debt must be estimated using one of several valuation methods, s.a. discounted cash flow or others.

  5. Customer Value Customer value is the value received by the end-customer of a product or service. End-customer can include a single individual (consumer) or an organization with various individuals playing different roles in the buying/consumption processes. Customer value is conceived variously as utility, quality, benefits, and customer satisfaction.

  6. Employee knowledge This is often an undervalued asset in companies and also the area where there is the most discord in reporting. Employees are the most valuable asset companies possess and the one we expect the most from, but often the one that receives the short end of the stick when it comes to values applied to them.

  7. Channel Partner Value The value a business underpins on partner relationships in the business. Partner value here stresses that it can be critical to a firms functioning. It ceases to exist or carry out business activities if partner value is diminished or lost.

  8. Managerial Value Follow the people-oriented principle; Follow the principle of system value; Follow the liability principle of value;

  9. Societal Value The social environment also wants that the firm follows or adopts several values towards the society. These social values relate to the provision of hospitals, charity, schools, parks, wildlife protection etc.

  10. For more information click below :- Business Valuation

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