by Acacia Pinto
Business Valuation service refers to the process of establishing the value of a business or an entity based on the economic value of the business and its offerings. It is a crucial step in mergers and acquisition as it requires placing a value on the target entity in order to determine its financial worth. Business valuation is also useful for stockholders who wish to determine the net worth of the business and devise suitable strategies for the growth and expansion of the company. With Kuwait witnessing an increase in M&A activities in the last few years, small business valuation service has become an imperative part of the process.
Alkhuzam & Co. is one of the top valuation firms in Kuwait and it employs three different methods to determine the value of a business. These are commonly accepted methodologies that are applied at an international level and can be scaled down for small to medium sized enterprises as well. Let us introduce some of valuation services examples.
Some people asked, what business valuation services cost ? Typically, income-based valuation approaches reduce a future benefit stream to its present value using the appropriate discount rate, converting it into a single sum. In other words, figuring out the present value of a future benefit stream is the foundation of any revenue approach. There are two commonly used methodologies under the income approach as described below:
This methodology employs the use of market values to assign a value to the given entity. The first method used is the Comparable Market Transaction Method where a firm is valued using price multiples from the sales of businesses that are comparable to the subject company. Finding transactions involving the acquisition of comparable companies, choosing the transactions that most closely reflect the company's operations and that took place under circumstances that are similar to those of the industry and the economy, and then applying the indicated pricing multiples from the representative transactions are the steps taken in this method. We also can provide national business valuation services.
The final method is determining the value using the book values of the assets and liabilities of the entity. The equity value of an entity is determined by subtracting the fair market value of its assets from its liabilities. This method involves converting assets from book value to fair market value, and then deducting recorded and unrecorded liabilities from the total of the adjusted assets. Application of the Adjusted Net Book Value Method often defines a company's "floor value" that is the amount that would be received if its assets were sold and its obligations were paid off. When losses are consistently generated, when a company is capital-intensive or when valuation procedures based on net income or cash flow levels show a value lower than net asset value, this methodology is appropriate.
What is Business valuation service definition or meaning ?
It’s a way to assess the status or the performance of a business or to specify the value of a business in specific time.
The method most suitable for your business depends on the preference/decision of the management and the amount of information available in the market. Some businesses employ a simple asset based valuation while competitive business with market intelligence use advanced metrics and index to develop comparative value of the business. Our business advisors are fully equipped with market intelligence and financial tools to help you determine an appropriate value for your target entity.
Visit us to know more about the application of valuation services and discuss the different ways in which we can serve your business.
