Our valuation Service is designed to assist business owners in understanding the approach of purchasers to valuation and the value achievable in the event of a sale.
Our accumulated experience in private company sales across a broad range of industries in the UAE has given us a strong understanding of the value of a company to a purchaser. In addition, our market presence and ongoing company sale activities provide us with a continuous insight into market pricing and valuations. Valuation of business involves detailed analysis of historical statements, precise estimation of future projections and its impact on the earning potential of the business as a whole. Various valuation techniques are used for valuing a business/company depending upon the applicability of each method or approach for particular business. Below are the main approaches which could be used for valuation:
- Net Assets Value; or
- Market-based Valuation; or
- Future Earning & its Net present value.
Given that the objective of the valuation by considering the business assuming a going concern, we normally apply the “Future Earning & its Net Present Value” based approach to valuing business/company. The most common methods/techniques used in future earning approach are:
- Capitalization of maintainable earrings; and
- Discounted cash flow (DCF)
We believe that the DCF method would be the most appropriate method to value your business due to the following reasons:
- Historical results may not be indicative of its future earnings
- New alliances with partners
- New expansion plan
- A short history of operations
- Potential growth of the Group
A valuation based on the DCF method requires the determination of the following parameters:
- Free cash flow to the company
- Discount rate
- Terminal value or Residual value
- Redundant or excess assets
We would adopt the Future Earning/Income based approach comprising of discounting cash flow (DCF) as a technique to value your company/business.