CORPORATE VALUATION

What is Value ?
Value is the worth of a thing
It is a bundle of benefits expected.

What is Corporate Valuation ?

The goal of corporate valuation is to estimate the fair market value of a company.
Fair Market Value is the price at which the property would change hands between a
willing buyer and a willing seller when the former is not under any compulsion to
buy and latter is not under any compulsion to sell, both parties having reasonable
knowledge of relevant fields.

Definition
Valuation is the process which links the risks and returns to determine the worth of
an asset or company.

Concepts of Value

Book Value

Market Value

Liquidation Value

Going Concern Value

Intrinsic Value

Misconceptions about Corporate Valuation

Myth 1: A valuation is an objective search for true value.

Myth 2: A good valuation provides a precise estimate of value.

Myth 3: Valuing a private business should only be done when the business is
ready to be sold or a lender requires a valuation as part of its due diligence
process.

Myth 4: The more quantitative a model, the better the valuation.

Myth 5: Businesses in an industry always sell for x times the annual revenue
(the revenue multiple). So why should valuation of the business be done by
an external valuer ?

Myth 6: The business should be at least worth equivalent to what a

competitor sold his business for recently.

Myth 7: How much a business is worth depends on what the valuation is used
for!