A valuation forms part of nearly all acquistion and sale processes. A valuation forms the basis for negotiation and determining the price. The valuation may be performed on the instructions of the buyer or the seller, in the context of arbitration, or as an expert witness for the court. Whatever the background to the valuation may be, one assumption is always the same: a valuation is based on future expectations. The golden rule of valuation is: it’s not about possessions, but about yield from possessions, the income generating capacity of your assets.
Many methods are applied. Performing a valuation is a lot more than simply “doing the maths”. It is essential when performing a valuation to thoroughly understand the business, to have experience of doing deals, and to use your common sense. The factors taken into account which substantiate the valuation are ultimately just as important as the result; both are meaningless on their own.
Reasons for valuation
The most frequent reason for performing a valuation is in the case of businesses that are for sale, and they take place in the context of a change of ownership, Strategic acquisition, Management Buy-Out, Management Buy-In. Besides this there are other frequently occurring reasons for performing a valuation:
- A merger;
- Legal restructuring;
- Buying out a minority shareholder;
- Business succession;
- Entry or exit of investors.
Specialised business valuations
Besides the more general issues relating to the valuation of a business, Factor Corporate Finance is an expert in the field of specialised valuations:
- Damages in the event of disputes;
- In the case of fiscal issues and litigation;
- Share and option schemes;
- For financial reporting (impairment);
Factor Corporate Finance’s specialists have all completed the professional course in Business Valuation at the Rotterdam School of Management (RSM Erasmus) and are also affiliated to the NIRV (Nederlands Instituut voor Register Valuators).