Transaction Advisory Services
Valuation
We offer valuation services in the following:
Business Valuation
Determining the fair market value of a company or its assets.
Share Valuation
Estimating the value of shares in a company.
Intangible Asset Valuation
Assessing the value of intellectual property, brands, and goodwill.
Business Valuation: Determining a Company's Worth
Business valuation is the process of determining the economic value of a business. It involves a comprehensive analysis of the company’s financial performance, assets, liabilities, and future prospects. The outcome of a valuation is a monetary estimate of the business’s worth.
There are three primary approaches to business valuation:
Primary Approaches to Business Valuation
Income Approach
Discounted Cash Flow (DCF) Analysis:
Projects future cash flows and discounts them to present value.
Capitalization of Earnings
Converts a company’s expected future earnings into a present value.
Suitable for companies with stable cash flows and growth prospects.
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Market Approach
Comparable Company Analysis
Compares the company to publicly traded similar companies.
Precedent Transactions
Compares the company to similar companies that have recently been acquired.
Suitable for companies with publicly traded comparable or recent acquisition data.
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Asset-Based Approach
Book Value
Determines the value based on the company’s net assets (assets minus liabilities).
Liquidation Value
Estimates the value if the company were to be liquidated.
Suitable for companies with primarily tangible assets or in distress.
Share Valuation: Determining a Share's True Worth
Share valuation is the process of determining the intrinsic value of a company’s stock. It involves analysing various financial metrics and market data to estimate the fair price of a share.
There are two primary approaches to share valuation:
Intrinsic Value Valuation
Dividend Discount Model (DDM)
Assumes the stock’s value is the present value of future dividends.
Discounted Cash Flow (DCF) Model
Estimates the intrinsic value based on the company’s projected future cash flows.
Price-to-Earnings (P/E) Ratio
Compares the company’s share price to its earnings per share.
Price-to-Book (P/B) Ratio
Compares the market value of a company’s equity to its book value.
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Relative Valuation
Comparable Company Analysis
Compares the company’s valuation multiples (P/E, P/B, etc.) to those of similar companies.
Precedent Transactions
Compares the company’s valuation to those of similar companies that have been acquired.
Primary Approaches to Share Valuation
Intangible Asset Valuation: A Complex Endeavor
Intangible assets are non-physical assets that hold value for a business. They include patents, trademarks, copyrights, goodwill, and brand recognition. Valuing these assets is significantly more complex than tangible assets due to their intangible nature and lack of a physical market.
Despite these challenges, several methods are employed to estimate the value of intangible assets:
Methods to Estimate the Value of Intangible Assets
Income Approach
Relief from Royalty Method (RRM)
Estimates the value by calculating the hypothetical royalty payments saved by owning the asset rather than licensing it.
Multi-Period Excess Earnings Method (MPEEM):
Isolates cash flows attributable to the intangible asset and discounts them to present value.
With and Without Method (WWM)
Compares the value of the business with and without the intangible asset.
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Market Approach
Comparable Transaction Analysis
Compares the asset to similar assets that have been sold.
Licensing and Royalty Analysis
Analyses licensing and royalty agreements for similar assets.
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Cost Approach
Replacement Cost Method
Estimates the cost of recreating the intangible asset.
Valuation is a science and an art. Sometimes, we use a combination of different approaches and methods.
