Company valuation for a company purchase or sale
... Determination of beta factors and capital costs
A purchase or sale of a company necessitates the parties having an idea of a reasonable price. A company valuation delivers the basis for price considerations. The popular multiples method does not replace a valuation and should only be used for communication purposes with the other party. In order to gain a solid understanding of the chances and risks associated with the transaction – the risks are a parameter of the purchase price – a professional company valuation on the basis of the capitalised earnings or discounted cash flow method is essential.
A management-buy-out (MBO) is a special form of a company purchase. It’s particularity is the valuation object, because only a part of the business may be purchased rather than the entire legal entity, because of the limited financing options for the purchase price which usually play a role and the situation of the purchaser, who needs to balance his loyalty to his employer – who is the vendor at the same time – and safeguarding his own interests.
- Business analyses in all relevant segments (finance, taxes, etc.) in the form of financial due diligence, tax due diligence, etc.
- Preparation of sector analyses, competitive analyses and market studies.
- Development of integrated business plans
- Performance of scenario analyses and calculation of valuation ranges
- Company valuation using all common valuation methods
- Development of purchase price financing models and sustainability analyses
- Preparation of valuation reports for credit applications and sales negotiations
- Organisation of the entire sales process if desired
- Calculation of a realistic sales price
- Pre-selection of offers
- Acceleration of credit applications through professional preparation
- Avoidance of costly misjudgements
- Preparation of detailed bases for valuation for purposes of purchase price guarantees
- Assurance of a confident negotiating position
- Efficient negotiations based on detailed expectations of value