Basics of Valuation

Basics of Valuation

What is Valuation

Valuation refers to the process of determining the present value of a company or an asset. It can be done using a number of techniques. Analysts that want to place value on a company normally look at the management of the business, the prospective future earnings, the market value of the company’s assets, and its capital structure.

Two Main Valuation Categories

valuation categories

Popular Methods of Valuation

Valuations

Advantages of Valuation:

  • Gives a better understanding of the true value of your business / assets
  • It is crucial during fund raising or M&A’s, as the entrepreneur needs to understand the full value of the business prior to negotiations
  • Helps in benchmarking business progress and ensure that growth in on the right track
  • Attracting talent is easier if you are offering ESOPs and employees can see the growth in the business value.