In mergers, demergers, acquisitions and sales, our specialists analyse the company’s past and current position and carry out a thorough assessment. Together with forward-looking projections, we determine the value of the whole company and of its individual units to accepted standards, and report on the factors that raise or lower that value.
For companies that do not yet have financial statements, we assess capacity, analyse costs line by line and conduct sector research. We then build pro forma financial statements from forward-looking projections and base the valuation and report on them.
What is valuation?
In its broadest sense, valuation is the process of estimating the value of an asset or a liability. First the quantity of the items to be valued is established, which means taking inventory. Those quantities are then expressed in monetary terms.
Establishing quantities is an objective exercise. Assigning value involves judgement, so the accuracy of the result depends on choosing the right methods and data. Company valuation means arriving at the combined current value of the firm’s debt and equity. From the shareholders’ perspective, it is the equity value: the current value of assets less the current value of liabilities.
Value and price
Price is the amount a buyer and a seller agree on for a good or service when both are adequately informed about the market; it is exchange value expressed in money. Value is the amount calculated on the assumption that the asset has been valued and all relevant information has been taken into account.
Price and true value are not always the same. The valuation process is the set of activities that brings the two closer together.
When is a valuation needed?
- Sale of a business
- Mergers and demergers
- Preparation of financial statements
- Admission of a new partner or exit of an existing one
- Valuation of shares
- Determination of insurance value
- Division of a business among heirs
- Secured borrowing
- Valuation in the context of a tax audit (Tax Procedure Law, art. 258)
- Valuation of individual business units
- Portfolio construction and portfolio decisions
