M&A Consultancy

Company valuation

The issue of determining a company’s objective or “fair” value often plays a central role in the context of company sales, corporate succession processes and company acquisitions. In order to determine (or rather calculate) a company’s objective or “fair” value, one must rely on a methodical company valuation. Although any company is only worth as much as will ultimately be paid for it, this forms the basis of price negotiations.

All company valuations are generally based on the business trends of the past year and business planning for the years ahead. A professional valuation is thus based on various methods and approaches, so as to narrow the range of the company’s potential value to the greatest possible extent and to ensure that the company-specific characteristics are taken into account in the course of the appraisal. We typically use the following company valuation methods, depending on the particular situation and starting point in question:

• Profit-oriented methods (discounted income or DCF method)
• Comparison-oriented methods/multiplier approach based on both comparable capital market-oriented companies and comparable past transactions
• LBO method
• Net asset value approach

The most appropriate company valuation methods are chosen in consultation with the client following a preliminary review of the company.