Business valuation is the process of evaluating the worth of a business. In simple terms, it's the price that a regular person would pay to own future cash-flow of your business.
It is the process of arriving at the Fair Market Value of your business.
PocketLawyer is India's leading platform for fundraising services and we make the process of calculating business valuation easy and hassle-free for you. In addition to Business Valuation, PocketLawyer can also help you in Fundraising, Business Projection, Business Plan and more.
Why is it important?
A common perception is that you need business valuation only for sale or merger. But, it is equally important even when your business isn't undergoing any of the above transactions.
Another perception is that only startup need it. But businesses of every type and size may need it at one point or another.
This is because it is an accurate measure of company's progress over time.
So, periodic valuation of your business can easily track its progress over time.
Methods of Business Valuation
There are two methods of valuing a business.
A. DCF Method
It takes into account the future cash flow of business and its present value.
B. Market Multiple Method
It uses sales figures to calculate the value of a business.
Process of Business Valuation
The process of valuation involves the following steps.
A. Planning and Preparation
This is the first step where you decide why you need the valuation of your business. You also need to collect all the information needed to do it. You may need to collect the following documents.
- Financial statements such as Profit & Loss Account and Balance Sheet
- Marketing plans
- Business plan
- Operational plan of business
- Staff records
- Details of customers and vendors
B. Adjustment of Financial Statements
For accurate valuation, you need to provide at least 3 years' worth of financial statements. The most important documents during this step are the income statement and balance sheet.
Some kind of adjustment may be needed to accurately reflect income and balance sheet figures.
C. Choosing the right method of valuation
The following factors are taken into account.
- Value of the company’s assets.
- Comparative business sale data.
- History of earnings of the business.
- Availability of Business Projection data.
- Data on the cost of capital of business.
D. Applying the chosen method of valuation
This is where the valuation expert applies the chosen method to arrive at the accurate value of business.
E. Reaching a conclusion
In this step, valuation expert arrives at a conclusion. This is where he/she will determine a reasonably accurate value of your business.
Which method is right for my business?
There is no right or wrong method. Each method has its pros and cons. It all depends on the nature and size of your business. You can have a phone or in-person consult session with our experts to know which method will suit your business the best.
What is the fee?
The professional fee for business valuation starts from Rs. 25000.
Why choose PocketLawyer for Business Valuation?
- Experienced and qualified professionals with 12 years of average experience.
- Access to highly qualified professionals anytime, anywhere in India.
- Fixed price. No hidden fees or long-term commitment.
- 100% satisfaction guaranteed. Our money back guarantee makes sure that you get complete satisfaction, every time you choose our services.
What is more?
- Our dedicated support team is always there to help you with any query or issue that you may have.
- Choosing PocketLawyer means the best service, at the best price