Company valuation is the procedure of determining the economic value of a business and providing owners with an unbiased assessment of their company’s worth. Typically, company valuation is sought when owners intend to sell all or part of their business, merge with another company, secure debt or equity financing for business growth, undergo a comprehensive tax analysis, or plan to bring in new shareholders.
In the latter case, it is also necessary to ascertain the value of the company’s shares. The valuation process involves assessing various aspects of the business, including its management, capital structure, projected earnings, and the market value of its assets, in order to determine the company’s current market worth. Valuation methods may vary depending on factors such as the industry structure, company structure, and the valuer’s perspective. Commonly used valuation methods include comparing the company to similar businesses, applying discounted cash flow models, and examining financial statements.