Business valuation helps you to gain a clear idea of your business. It helps in increasing the goodwill and evaluate the present value according to the market conditions.
Knowing the accurate value that your business holds helps you to have an upper-hand over other business at the time of merger or acquisition.
Business valuation presents the company’s worth; and having a high worth would ultimately attract investors towards your business to a great extent, leveraging the growth opportunities.
Once you know the value of your business, it will act as a decision-making tool that helps you to take long-term decisions regarding your business development
Possessing knowledge about your company’s worth will build a trust in the minds of the financial institutions and will help you to grab an easy loan from the market for future expansion.
Valuation reports contain the core details of company assets and liabilities. They contain the company’s present worth, and ultimately this helps in restructuring the company as and when required.
The key drivers of business valuation are assets, liabilities, income, management, and location. To determine the value of your business, you need to follow any of the business valuation methods. These are also known as business valuation models that help you to understand the worth of your business. Business valuation models include the following approaches:
1. Asset-Based Approach
This approach of determining the business value totals up all the investment. Applying this technique to a corporation serves well as it will be included in company sale, whereas applying the same to a sole proprietorship becomes difficult as the assets belong to the same owner and separating them for business and personal use becomes a challenge.
2. Earning/Income-Based Approach
This method believes in the fact that a business’s real value lies in building wealth for the future. Keeping this in mind, a valuator determines the future cash flow by examining the records and also assesses the future financial risk.
3. Market Value Approach
This approach compares the value of one’s business to similar businesses that have recently sold. It can be applied only when there is a sufficient number of competitors in the market.
Let’s see how Alriyadah can help you in the business valuation process.
We can say that the calculation of Business Valuation turns out to be a tedious process and is recommended to take the advice of professional experts. Alriyadah is one of the premier chartered accountant firm in the UAE. Since its inception, it has been dealing with multiple clients across all the Emirates and has helped them in structuring the accounts and audit processes. Our experienced accountants do provide custom solutions according to your business needs. To have a word, do contact us-we’d be glad to assist.