KNOW EVERYTHING ABOUT BUSINESS VALUATION BEFORE MAKING DECISIONS

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WELCOME

• KNOW EVERYTHING ABOUT BUSINESS VALUATION BEFORE
  MAKING DECISIONS

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• Business owners fundamentally need to know what
  their firm is worth.
• This information is essential when intending to
  sell a firm, developing an exit strategy,
  transferring ownership to the owner's family,
  exploring new partnerships, merging with another
  company, or managing ESOPs.
• These are just a handful of the reasons why a
  business should be valued.

INTRODUCTION
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• Business valuation is a combination of
  arithmetic, research, and, in certain cases, a
  very informed assumption!
• A variety of methodologies may be employed to
  undertake business appraisal.
• This exercise should ideally be performed by
  qualified specialists, as professional judgement
  is required to
• Predict the financial performance of a
  corporation.
• Consider the value of a company's own technology
  or specialized expertise.
• Determine the likelihood of success in light of
  changing economic conditions.

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THE THREE PRIMARY APPROACHES TO BUSINESS
VALUATION ARE AS FOLLOWS

• Asset-based method The firm is valued using
  this technique by calculating the difference
  between assets and liabilities.
• Income-based method In this technique, the
  worth of the firm is evaluated to be equal to the
  current value of the predicted economic income.
  This method discounts or capitalizes projected
  gains at a rate of return that represents the
  risks and hazards of the investment.
• Market-based method The core premise of this
  technique is that the fair market value of a firm
  may be calculated using the prices paid by
  investors for stocks of similar, publicly traded
  (or private) companies.

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ADVANTAGES OF BUSINESS VALUATION
1 Knowledge of firm assets - The business owner
obtains knowledge on the actual worth of the
company's assets and is no longer required to
rely on guesses. Business valuation assists in
making judgments about insurance coverage, the
amount of investment necessary, and so forth.
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2 Resale value - Business valuation demonstrates
the company's genuine market worth. If the owner
intends to sell the firm, this procedure is
required since it offers the owner bargaining
leverage. 3 True company value - Business
valuation incorporates not just simple data
points such as stock market value or profit
statistics, but also historical data as well as
income and valuation growth projections. As a
result, business valuation represents the
company's genuine value. 4 Access to new
investors - Business valuation can assist
business owners in their search for new
investors. To comprehend the company's future,
potential investors would always demand on a
business valuation study.
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CONCLUSION

• Business valuation also aids in the development
  of long-term business strategy. Previous
  valuations might be utilized as benchmarks to
  help the firm strategize its growth ambitions.
• Business valuation is a key procedure that
  assists a firm owner in understanding numerous
  components of a business, making it useful to the
  owner.