How to calculate how much a business is worth. Express valuation model of the company. Salvage value method

What methods (methods) are used to assess the value of a business? How is business valuation carried out by example and what are the goals for this? What documents are needed to assess the business of an enterprise?

Hello everyone who visited our resource! In touch Denis Kuderin - expert and one of the authors popular magazine"HiterBeaver".

In today's publication, we will talk about what a business valuation is and why it is needed. The material will be of interest to present and future entrepreneurs, directors and managers of commercial companies and all those who are close to business and financial topics.

Those who read the article to the end will receive a guaranteed bonus - an overview of the best Russian companies specializing in business valuation, plus advice on choosing a reliable and competent appraiser.

1. What is a business valuation and when is it needed?

Any business - whether it is a plastic cup manufacturing company or an automotive complex - strives to develop and expand its sphere of influence. However, it is impossible to correctly assess your prospects without a comprehensive analysis of the current state of affairs.

It is business valuation that gives owners and managers of existing commercial enterprises a real picture of the company's assets and its potential.

When does a business need an appraisal?

• sale of the entire enterprise or its shares in the form of shares;
• rent of an operating business;
• development of new investment directions in order to expand and develop the company;
• revaluation of funds;
• reorganization of the company - merger, separation of individual objects into independent structures;
• liquidation of the company as a result of bankruptcy or termination of activities;
• issue or sale of shares;
• optimization of production and business activities;
• changing the format of the company;
• leadership change;
• transfer of assets as collateral;
• transfer of shares of the enterprise to the authorized capital of a large holding;
• company insurance.

As you can see, there are many situations in which a business needs a professional assessment. But the main goal of such a procedure is always the same - a competent analysis financial efficiency businesses as a means of making a profit.

When initiating business valuation activities, stakeholders want to know what revenues a particular business structure is generating or will generate in the future. Sometimes the task of the assessment is even more specific - to answer the questions: develop or sell the company, liquidate it or try to reorganize, whether to attract new investors?

The value of a business is an indicator of its success and efficiency. The market price of a company consists of its assets and liabilities, the value of personnel, competitive advantages, profitability indicators for the entire period of existence or a specific time period.

Small business owners and individual entrepreneurs may have a question - is it possible to evaluate the enterprise on their own? Alas, the answer is no. Business is a complex and multifaceted category. You can get a rough estimate, but it is unlikely to be objective.

And one more important nuance - independently obtained data do not have an official status. They cannot be considered as full-fledged arguments and will not be accepted, for example, in court or as.

2. What are the goals of business valuation - 5 main goals

So, let's consider the main tasks that are solved during the business valuation procedure.

Goal 1. Improving the efficiency of enterprise management

Efficient and competent management enterprise is a prerequisite for success. The financial status of the company is characterized by indicators of stability, profitability and stability.

Such an assessment is needed mainly for internal use. The procedure identifies excess assets that slow down production and undervalued industries that can bring profit in the future. It is clear that the first must be disposed of, the second - to develop.

Example

In the course of a business assessment in a trading company, it turned out that the use of rented warehouses for storing products is 20-25% cheaper than maintaining and maintaining own premises that are on the balance sheet.

The company decides to sell its warehouses and continue to use only leased space. There are cost savings and optimization of production processes.

Goal 2. Purchase and sale of shares in the stock market

The management of the company decides to sell its shares on the stock market. To make an economically viable decision, you need to evaluate the property and correctly calculate the share that is invested in securities.

Selling shares is the main way to sell a business. You can sell the company as a whole or in parts. Obviously, the cost of a controlling stake will always be higher than the price of individual shares.

At the same time, valuation is important for both stockholders and buyers. It is also desirable that the appraiser not only name the market price of the package, but also analyze the prospects for the development of the business as a whole.

Goal 3. Making an investment decision

Such an assessment is carried out at the request of a specific investor who wants to invest in an existing enterprise. Investment value is the potential ability of invested funds to generate income.

The appraiser finds out the most objective market value of the project from the point of view of the investment perspective. For example, the prospects for the development of the industry in a particular region, the direction of financial flows in this area, and the general economic situation in the country are taken into account.

More information - in the article "".

Goal 4. Enterprise restructuring

The main goal of the owner ordering an appraisal during the restructuring of the company is to choose the most optimal approach to the processes of changing the structure of the company.

Restructuring is usually carried out in order to improve business efficiency. There are several types of restructuring - merging, accession, separation of independent elements. Evaluation helps to carry out these procedures with minimal financial costs.

With the complete liquidation of the object, the assessment is needed mainly for making decisions on the return of debts and the sale of property at free auction.

In the process of restructuring, it is often required to carry out, the current assets and liabilities of the company, complete.

Goal 5. Development of an enterprise development plan

Development strategy development is impossible without assessing the current status of the company. Knowing the real value of assets, the level of profitability and the current balance, you will rely on objective information when drawing up a business plan.

In the table, the assessment objectives and features are presented in a visual form:

№	Objectives of the assessment	Peculiarities
1	Improving management efficiency	Results apply for internal use
2	Purchase and sale of shares	Valuation is important for both sellers and buyers
3	Making an investment decision	The object is evaluated in terms of investment attractiveness
4	Business restructuring	Evaluation allows you to change the structure, taking into account maximum efficiency
5	Development plan development	Evaluation allows you to draw up a competent business plan

Method 3. Estimated by industry peers

It uses data on the purchase or sale of enterprises close in profile and volume of production. The method is logical and understandable, but you need to take into account the specifics of the company being valued and specific economic realities.

The main advantage of this method is that the appraiser focuses on actual data, not abstractions, and takes into account the objective situation on the sales market.

There are also disadvantages - the comparative approach does not always affect the prospects for business development and uses average indicators of industry peers.

Method 4. Estimated cash flow forecast

The assessment is carried out taking into account the long-term prospects of the company. Specialists need to find out what profit a particular business will bring in the future, whether investments in the enterprise are profitable, when the investments will pay off, in what directions the funds will move.

4. How to assess the value of the business of an enterprise - a step-by-step instruction for beginners

So, we have already found out that only professionals can competently evaluate a business. Now consider the specific steps that business owners need to take.

Step 1. Choosing an appraisal company

The choice of an appraiser is a responsible and important stage of the procedure. The final result depends entirely on it.

Professionals are distinguished by the following features:

• solid experience in the market;
• use of up-to-date technologies and methods, modern software;
• availability of a functional and convenient Internet resource;
• a list of well-known partners who have already used the services of the company.

The assessors themselves must have permits and professional liability insurance.

Step 2 We provide the necessary documentation

The appraisal firm will certainly explain to you in detail what documents you need to provide, but if you collect the package in advance, this will save time and immediately set the appraiser on a business wave.

Clients will need:

• title documents of the company;
• company charter;
• registration certificate;
• a list of real estate, property, securities;
• accounting and tax reports;
• list of subsidiaries, if any;
• certificates of debt on loans (if there are debts).

The package is supplemented depending on the goals and features of the procedure.

Step 3 We coordinate the business valuation model with the contractor

Usually the customer knows for what purpose he conducts the assessment, but is not always aware of which methodology is best to apply. During the preliminary conversation, the expert and the client work together to develop an action plan, determine the methods of evaluation and agree on the timing of its implementation.

Step 4 We are waiting for the results of industry market research by experts

To begin with, appraisers need to analyze the situation in the industry segment of the market, find out current prices, trends and development prospects for the area under study.

Step 5 We follow the business risk analysis

Risk analysis is a necessary stage of business assessment. The information obtained in the course of such an analysis is necessarily used in the preparation of the report.

Step 6 We control the determination of the development potential of the enterprise

Professional appraisers always take into account the prospects for business development, but it is desirable for clients to control this stage of the study and be aware of the results. It is always good to know what potential your enterprise has.

Step 7 We receive a report on the work done

The final stage of the procedure is the preparation of the final report. The finished document is divided into separate positions and contains not only bare figures, but also analytical conclusions. The report, certified by signatures and seals, has official force in resolving property disputes and in litigation.

How to conduct an assessment as competently and safely as possible for your company? The best option is to involve independent lawyers as consultants at all stages. This can be done by using the services of the site Lawyer. The specialists of this portal work remotely and are available around the clock.

Most of the consultations on the site are free. However, if you need more in-depth assistance, the services are paid, but the amount of the fee is set by the customer.

5. Professional assistance in business valuation - an overview of the TOP-3 valuation companies

No time, desire or opportunity to look for an appraiser yourself? Don't worry, take advantage of our expert review. The top three Russian appraisers include the most reliable, competent and trusted companies. Read, compare, choose.

It doesn’t matter for what purpose you are conducting an assessment - buying and selling, lending on collateral, improving management, reorganization - KSP Group specialists will carry out the procedure professionally, promptly and in accordance with all the rules.

The company has been operating on the market for more than 20 years, has about 1000 regular customers, and is well versed in realities. Russian business provides free consultations to clients. Among the permanent partners of the company are well-known companies, small and medium-sized businesses.

The organization is a member of Self-regulatory organization ROO (Russian Society of Appraisers) and liability insurance for 5 million rubles.

The company was founded in 2002. The company guarantees prompt work (the term for business assessment is 5 days) and offers adequate prices (40,000 for a standard assessment procedure). In its methods, the organization adheres to the principles of "Ethical Business" - transparency, honesty, openness, compliance with the terms of the contract, responsibility.

Yurdis employs 20 professional appraisers, members of the largest Russian SROs. Each of the specialists has liability insurance in the amount of 10 million rubles, diplomas and certificates confirming high qualifications. Among the well-known clients of the company are Gazprombank, Sberbank, Svyazbank, Center for Organization of Military Mortgage.

3) Atlant Grade

The company has been doing business in the appraisal market since 2001. Works with tangible and intangible assets, develops and predicts ideal schemes for increasing income, cooperates with enterprises in all regions of the Russian Federation.

The list of advantages includes the reference accuracy of estimates, competent legal registration reports, a clear understanding of the goals and objectives of customers. The firm is accredited by commercial and state banks of the Russian Federation, uses an expanded methodological base in its work, and applies its own technological and scientific developments.

And a few more tips on choosing a competent appraiser.

Reputable companies have a well-designed and flawlessly functioning website. Through the Internet resource of such companies, you can get free consultations, order services, talk with managers and representatives of the support service.

Conversely, one-day firms may not have a network portal at all, or it may be designed as a cheap one-page site. No additional information, analytical articles, interactive features.

Tip 2. Refuse to cooperate with broad-based companies

Organizations that position themselves as universal firms do not always have the appropriate level of competence.

At the present stage of development of the business market and the world economy, the valuation of intangible assets and intellectual property has become no less important than tangible ones. The role of objective analysis and accurate determination of business value has increased. This procedure is simply necessary for those who are planning to invest, buy or sell enterprises. Independent evaluation The value of the company in such situations becomes an important management tool that will enable you to make the right choice, avoid many risks and get the maximum profit. It will not even be able to fully function and expand without a qualitative assessment at one of the stages of development.

What is a business valuation?

Business valuation is a procedure for determining the market value of an enterprise (taking into account tangible, intangible assets, financial condition, expected profit) conducted by authorities or experts. Any property in conjunction with a package of rights to it can become the object of assessment. The meaning of the term "business valuation" is slightly different. It implies the definition money ratio the value of an enterprise, which includes (other than assets) its utility and the costs incurred to obtain it.

The main purpose of the appraisal is to establish for the client the value of the market value of the assets being appraised. The customer initiates a business valuation, as a rule, in the event of a sale or purchase of a company, equity interest, lending, project financing, improving the efficiency of enterprise management, etc. Often there are situations when several reasons are combined.

When do you need a business valuation?

An increase in the value of a business is one of the important indicators of the growth of its profitability, a decrease indicates the need for changes in the management system and development strategy. In carrying out objective evaluation both the owner of the enterprise and a third party may be interested.

The value of a business is determined by:

• assessment of management effectiveness;
• corporatization;
• reorganizations;
• use of mortgage lending;
• taxation upon inheritance, donation;
• participation in the activities of the stock market;
• assessment of allocated business shares in the event of a merger in the form of consolidation and expansion;
• partial or complete liquidation;
• issuance of new shares, etc.

A business valuation may be needed not only by a potential investor or owner of an enterprise, but also by other market participants, such as insurance companies (to determine the amount of risk, confirm compliance with a risk sharing agreement between the client and the insured), credit institutions(to assess solvency, determine the optimal amount of the maximum loan), as well as government agencies, shareholders, suppliers, manufacturers, intermediaries. The end result of the evaluation can be presented in one report in several sections or in two different documents. The assessment of the enterprise is carried out in accordance with the goal, which is formulated by the customer when drawing up the Contract and the Assignment for assessment. They must necessarily comply with the Federal Law "On valuation activities in Russian Federation”, the provisions of the “National Code of Ethics for Appraisers of the Russian Federation” and the Federal Appraisal Standards.

Business valuation methods

Before investing or acquiring a business, the buyer first of all evaluates its usefulness for himself. It must meet his individual income needs. It is the latter indicator, taking into account costs, that is the basis of the market value that the appraiser calculates. The principles, methods and approaches to its definition are chosen based on the specifics of a business as a “commodity”: investment (money is invested in it, expecting to make a profit in the future), consistency (it can be sold as a system or individual elements), need (depends on the situation inside production and external environment). The appraisal process consists of several stages performed by a specialist appraiser to objectively determine the value of a business:

• conclusion of an appraisal agreement with the customer;
• determination of the characteristics of the object of assessment;
• market analysis;
• selection of assessment methods, calculations;
• generalization of the results obtained within the framework of each of the approaches, determination of the final value of the value of the object;
• preparing and submitting a report to the client.

At the fourth stage, the appraiser chooses one or more optimal approaches to enterprise valuation that will be most effective in a particular situation. Business valuation methods are universal, but they are selected individually in each situation.

costly

This approach implies a set of methods for assessing the cost of an object, which are aimed at determining the costs necessary for the restoration, replacement of the enterprise, taking into account costs, equipment wear and other factors. It allows you to track absolute changes in the balance sheet with its possible adjustment to the date of assessment (according to an independent expert appraiser) - data on current market prices for labor, materials and other costs are used.

Profitable

The income approach means a set of methods for assessing the value of an object, which are based on determining the amount of expected income from a business. In this case, the key factor determining the value of the object is income. The larger it is, the higher its market value. Here, the experts apply the estimated principle of expectation, taking into account the period of receipt of potential income according to the plan, the number and degree of risks. For the analysis, capitalization ratios are used, which are calculated based on market data. This valuation method is considered the most effective and convenient for determining the value of a business (only in some cases, comparative or costly ones turn out to be more accurate). The approach is better to use if the company's income is stable.

Comparative

The comparative method of determining the value of an enterprise means a set of valuation methods that are based on a comparison of the object of assessment with competing objects (with similar characteristics, availability of information on transaction prices). Experts believe that it is he who gives the most accurate results (of course, subject to the active work of the market for properties similar in parameters). For this approach, market data for similar objects and the method of the capital market, transactions and industry coefficients are used (with elements - comparative analysis by benchmarks).

Important: it is worth noting that each approach makes it possible to emphasize and objectively analyze certain characteristics of the object of assessment, but they are all interconnected.

How to evaluate the value of a business?

The assessment of business and other objects is carried out by specialized companies. In order to assess the value of the enterprise, it is necessary to contact specialists, clearly indicate the purpose of determining the value and sign the Agreement. According to Decree of the Government of the Russian Federation of December 2007 No. 60, the assessment process should take place in several stages:

1. Definition of the object (description, rights to it, date and basis of assessment, limiting conditions).
2. Conclusion of an agreement on the assessment (definition and preliminary examination object, choice of type, sources of necessary data, selection of personnel, development of an assessment plan, drafting and conclusion of a contract, payment for services).
3. Determination of the characteristics of the object (collection and verification of data, determination of external and internal information).
4. Market analysis (includes analysis of financial ratios, reports, adjustment financial reporting for evaluation purposes).
5. Selection of methods within a specific approach (or several), carrying out the necessary calculations.
6. Summarizing the results, determining the final cost of the object.
7. Compiling and submitting a report to the client.

Choosing an appraisal company

The appraisal company is the organizer of the appraisal project, assists the appraiser in its management professional activity provides marketing, financial and information support. It provides services not only to business owners, but also to legal entities, financial institutions (most often banks), insurance companies and government agencies. Valuation services are paid, as a rule, by the owner of the property, but often the second party puts forward certain requirements regarding the appraiser company. When choosing an appraisal company, it is necessary to collect as much objective information about it as possible and make sure of its competence and professionalism. Particular attention should be paid to the following factors:

• time on the market;
• customer reviews;
• business reputation;
• position in the ratings of independent specialized agencies and publications (but it is important to pay attention to the rating criteria, it should be formed from generalized indicators; you can use data, for example, from the banki.ru resource, which display the degree of customer satisfaction with the services of different banks, and see what ratings companies they cooperate with);
• documents (Certificate of state registration of a legal entity, copies or scans of constituent documents, etc.);
• awards, certificates, diplomas;
• the amount of liability insurance (the higher it is, the safer it is for the customer).

The valuation company must prove itself as an organization that gives the right results and offers the services of objective experts, not motivated by a third party.

Submission of necessary papers

To start the assessment process, the business owner must provide a package of documents. Its position depends on the purpose of the event, the form of ownership and the criteria for the formation of the assessment. Many appraisal companies have launched websites where you can apply online or by phone (but you only need to submit documents in person). The basic package includes the following papers:

1. Registration Certificate or Articles of Association.
2. For joint-stock companies - reports on the results of the issue of securities, an extract from the register of shareholders.
3. Documents that reflect the organizational structure and activities of the facility.
4. Financial statements for the last 3-5 years, sometimes an additional explanation is needed for some balance sheet items.
5. Copies of patents, licenses.
6. If necessary, documents confirming the ownership of real estate.

Advice: It is important to consider that each appraisal company has its own work methodology. Sometimes, in addition to the basic set of documents, additional papers are required from the customer, for example, a development plan for the next few years, drafting an investment project, an auditor’s report, explanatory note from the owner with a description of the company and an indication of the number of staff.

Appraisal model agreement

The dynamic economic situation in the country and the world makes it necessary to develop an individual model for each assessment. The study of the same object is rarely repeated, but in this case it is impossible to reproduce the same assessment. Appraisers use generally accepted models as a basis. Their choice must be agreed with the client based on the goals and objectives of the project. The optimal model should take into account not only the financial aspect, but also help in assessing the level corporate governance, have the potential and act as an independent method for assessing the value of a business.

Basic business valuation models:

1. Economic value added (EVA).
2. Market value added (MVA).
3. Added value equity(Shareholder value added - SVA).
4. Total shareholder return (TSR).
5. Added thread Money(Cash value added - CVA).

Getting a report with results

Business valuation - example

The business valuation report can be submitted both in text format and in the form of tables or with their active use. For example, consider the valuation of an enterprise using the net asset value method (cost approach). It is most often used if the company has significant tangible assets (or very few of them), the percentage of total costs in the cost of a product or service is negligible, cash flow has been subject to significant fluctuations in recent years, and if the company does not have fully depreciated assets, which are currently bring income.

Consider an example based on a table:

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Business valuation is necessary not only for conducting purchase and sale transactions, calculating the collateral value, but also for other purposes, for example, to determine the effectiveness of management. In the course of performing the assigned task, the expert takes into account, in addition to the costs of creating an enterprise, market factors that may affect the cost, and also uses technological, organizational and financial analyzes. Valuation activity is the most important part of any developed state, because the results of the valuation become the basis for the adoption of important economic and management decisions in the private and public sectors.

In contact with

The value of the current business is an objective indicator of the functioning of the enterprise and reflects the current value of the benefits in the future from its functioning. This allows you to calculate the most likely price at which it can be sold on the open market. The question of how to assess the value of a business is of a practical nature and is of great importance for every entrepreneur at various stages of the company's functioning.

How is business valuation carried out

First of all, it is necessary to determine the main goal that the business valuation process has. There are two options here.

First option- the cost is necessary for the implementation of certain legal actions. That is, you need to obtain an official opinion in the form of a “Valuation Report”, which will be prepared by an independent appraiser licensed to carry out this procedure.

Second option– an appraisal is carried out to determine how much the real value of your business is. To do this, you no longer need the "Valuation Report", in accordance with the requirements of Law No. 135-FZ.

These options have a fundamental difference not in the quality of the work that the appraiser performs, but in relation to the results obtained. Valuation activity is a licensed type of activity. For this reason, certain requirements are imposed on it from the side current legislation. The fulfillment of these requirements in the process of compiling the Assessment Report, as a rule, causes an increase in the cost of the specialist's work.

If the results of the work are drawn up not in the form of an official Report, but as a Conclusion, during the negotiations, a detailed development and agreement of a clearly formulated task for the assessment takes place. According to this task, the appraisers will perform only the procedures you specify, which are required to resolve certain issues.

Business valuation is a procedure in which it is required to calculate the value of a business as property complex which provides its owner with a profit.

The assessment takes into account the value of all assets of the company: machinery, real estate, equipment, financial investments, stocks, intangible assets. It is also necessary to take into account past and future income, possible prospects further development companies, the competitive environment and the state of the market as a whole. Based on a comprehensive analysis, the company is compared with peer companies. After that, information about the real value of the business is already formed.

Methodology

Three methods are used to calculate the value of an enterprise.: costly, profitable and comparative. In practice, there are different situations, and for each class of situations, their recommended methods and approaches are used.

For an adequate choice of method, it is necessary to classify situations in advance, determining the type of transaction, the features of the moment for which the assessment is carried out, and so on.

Certain types of enterprises are most often evaluated on the basis of commercial potential. For example, for a hotel, guests are the source of income. This source is subsequently compared with the cost of operating expenses to determine the profitability of the business. This approach is called profitable.. This method is based on discounting the profit received from the rental of property. The valuation results under this method include both the land value and the building value.

If a business is not bought or sold, there is no developed business market in this direction, for example, a hospital or a government building is considered, then assessment can be carried out on the basis of the cost method, that is, it will take into account the cost of building a building, taking into account depreciation and depreciation costs.

If there is a market for a business that is similar to the one being valued, the market or comparative method can be used to determine the market price of the enterprise. This method is based on the selection of comparable properties that have already been sold on the market.

Under ideal conditions, all three methods used should give the same value. But in practice, markets are imperfect, producers may operate inefficiently, and users may have imperfect information.

These approaches involve the use of various evaluation methods.

The income approach includes:

• cash flow discounting method, focused on the assessment of the existing business, which will continue to operate. It is more often used to evaluate young companies that have a promising product, but have not yet earned enough income for capitalization.
• the capitalization method is used for those enterprises that, during capitalization, accumulated assets in previous periods.

The cost approach includes:

• salvage value method;
• the net asset method, applicable in cases where the investor plans to significantly reduce the volume of output or even close the enterprise.

Comparative approach includes:

• the method of industry coefficients, focused on the assessment of existing companies, which will continue to operate in the post-reporting periods.
• a method of transactions applicable in cases where it is planned to reduce output or close an enterprise.
• capital market method, also focused on operating enterprises.

Methods of the comparative approach are applicable only when choosing a company-analogue, which must be of the same type as the company being valued. Below we will briefly review the use of the main methods for calculating the value of a business.

Brief instruction

To calculate the cost of your business in the forecast period, you must use the discounting method cash flows. A discount rate is used to bring future income to present value.

Then, according to the forecast, the value of the business is calculated using the following formula:

P = CFt/(1+I)^t,
where I- discount rate, CFt denotes cash flow, and t is the number of the period for which the assessment is made.

At the same time, it is important to understand that your enterprise will continue to function in the post-forecast period. Depending on the further prospects for business development, various options are possible from complete bankruptcy to rapid growth. For calculations, the Gordon model can be used, which assumes stable growth rates of profits and sales and the equality of depreciation and capital investments.

In this case, the following formula is used:
P \u003d CF (t + 1) / (I-g),
where CF (t+1) reflects the cash flow for the first year of the post-forecast period, g– flow growth rate, I- discount rate.

This model is most appropriate when calculating indicators for businesses with a significant market capacity, stable supplies of materials, raw materials, as well as free access to financial resources and a generally favorable market situation.

If the bankruptcy of the enterprise and the further sale of property are predicted, then, To calculate the value of a business, you must use the following formula:
P \u003d (1-Lav) x (A-O) - Pliq,
where P liq- expenses for the liquidation of the enterprise, L cf– discount for urgent liquidation, O– amount of liabilities, BUT- the value of the company's assets, taking into account the revaluation.

Costs include insurance, taxation, appraiser fees, management expenses, employee benefits. The liquidation value also depends on the location of the company, the quality of the assets, the overall market situation and other factors.

In the course of the assessment of domestic enterprises, the date of the assessment is of great importance. Especially great importance settlements are tied to the date in a market that is oversaturated with property that is in a pre-bankruptcy state and lacks investment resources.

The Russian economy is characterized by an excess of asset supply over demand. This imbalance affects the value of the property offered for sale. The price of property in a balanced market will not match the value in a depression. But investors and business owners will be primarily interested in the real value in a particular market in certain conditions. And buyers are focused on reducing the likelihood of losing money, so they require guarantees. When assessing the value of a business, it is required to take into account all risk factors, including bankruptcy and inflation.

In inflationary conditions, at first glance, it is best to use the discounted cash flow method for calculations. This is true only if the rate of inflation is predictable. However, it is quite difficult to predict the flow of income in the conditions of instability for several years ahead.

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How to evaluate a ready-made business?

A few seditious thoughts

I am sure that professional appraisers will not like this article. Many of them may even want to crucify me upside down on the cross for seditious thoughts about the appraisal business. The fact is that the role of this sphere, its place in modern economy, especially in small and medium-sized businesses, are often exaggerated, redundant, and practical conclusions are controversial.

What is, by and large, a market valuation of a business? This is a determination of the cost for which it can be sold, and what profit it will bring in the future. Professional appraisers have several basic valuation methods at their disposal, the content of which is widely covered in the valuation literature and enshrined in valuation legislation.

Three methods are used in Russia: "income approach", "cost approach" and "comparative approach". All these methods are complex, require special training, and for an ordinary entrepreneur, whose motto is "act and earn!", They will seem unnecessarily complicated and have a very distant relation to his activities in the form of a pair of outlets, a car service or an online store.

Maybe appraisers are right with their calculations when it comes to large enterprises and transnational corporations?

Alas, not always. Otherwise, the stock market, trading in stocks and other securities would simply die, or would never experience the colossal fluctuations that we periodically observe. Indeed, in the stock markets, especially in countries with developed and rapidly developing economies, colossal money is spinning. Investment funds, management companies, before purchasing shares or bonds of certain companies, actually conduct a thorough assessment of the value of enterprises, rightly expecting a certain level of dividends or capital gains.
If business valuation methods were correct, then the movement of funds in the stock markets would be insignificant, since everyone represented quite accurately how much one could get by investing in a particular company. In fact, the stock market is very volatile and subject to significant fluctuations, sometimes contrary to the obvious logic and methods of calculating business valuation.

Take, for example, the latest stock market crisis. China suffered the greatest losses - since the beginning of this year, the total index of shares of Chinese enterprises has decreased by 20 percent. At the same time, China's GDP growth in 2007 amounted to 11.4 percent, the forecast for 2008 is approximately the same. So where for short term one-fifth of China's potential evaporated? It turns out that professional appraisers corrected their forecasts so quickly, having made a mistake by trillions of dollars?

What do I care, - an ordinary entrepreneur will say, - to China's GDP, investment funds of valuation methods and other high matters? And he will be right. No one but him can better assess the potential and value of his business. Indeed, in most cases, only the entrepreneur thoroughly knows all the weak and strengths their business, as well as the limit of its development. In order to evaluate the business yourself, it is enough to know a few basic points and follow common sense.

Shortcomings of Individuals

Sale ready business serves as a kind of moment of truth for the entrepreneur. The point is not even so much in how you developed it, but in the fact that by the time of the sale, due to ignorance of some legal aspects, its value may turn out to be much less than you imagined it. This is especially influenced by the choice of the organizational and legal form of doing business.

Many Russians, when starting their own business, register as individual entrepreneurs. Yes, this form has a lot of advantages: ease of registration, lower penalties, no need to make a seal and open a current account, etc.

But there are also disadvantages, one of which is directly related to the topic of the article - this form of entrepreneurship does not allow you to sell your business in one fell swoop as a complex of ready-made businesses. It is no coincidence that all business valuation methods enshrined in law are sharpened under legal entities. After all, you are acting as individual, and all contracts, property, permits, licenses, franchises, rights to trademark and so on are made out to you.

The buyer will have to re-register all this for himself, spending a lot of time and money. Naturally, all costs, including payment for speed, affect the final amount of the transaction. And it is not yet a fact that, by renewing the contract with the new entrepreneur, the landlord will provide the new owner with the same conditions as you. He may simply not like the personality of the buyer.

So, if you intend to sell your business, in advance, minimize the number of documents that require re-registration.
It is advisable to transfer your status as an entrepreneur to the owner of an LLC or a joint-stock company when your business has reached a more or less significant scale. Then you can safely prepare for its sale in whole or in large part.

On the contrary, when purchasing a business, remember about the possible additional costs associated with the peculiarities of its organizational and legal form - individual entrepreneurs are not sold, only their property is subject to sale, and the rights under the concluded agreements are assigned.

One business, three costs!

When you are about to sell your business, you have little interest in the motives of potential buyers at first. However, it is motivation that can have a significant impact on the final price of the transaction, that is, on its market value. A buyer can have three main goals, but they are all related to generating income:

1. Sale of your business in parts or further resale. It is quite possible that you own real estate objects or the right to lease a land plot located in a promising area where active development of residential buildings or shopping complexes is planned. Or is it a resale of a regional brand that you have developed, such as Petrov's Krupa, to some large Russian or foreign agro-industrial holding that is ousting competitors locally.

Approximately according to this scheme, the once famous Armavir Tobacco Factory, which has now become a haven for numerous offices, was bought out and then resold to one of the international tobacco concerns. In this case, the concept of liquidation value is applicable - the price of assets minus the total amount of liabilities and costs of sale.

2. Income from the activities of the enterprise. The buyer is interested in maintaining and developing the business. Perhaps some repurposing, reorganization or affiliation.

In this situation, we are talking about investment value, which takes into account the increase in profits from market expansion, the use of know-how, reorganization plans of the proposed owner. There's a lot of bargaining to be had here, just as Yahoo's shareholders did when they finally turned down Microsoft's super lucrative $44.6 billion offer. The guys from Yahoo apparently felt that in the future their company would cost much more.

3. The combination of the maximum indicators of the two values, liquidation and investment, results in a reasonable market value. Sell ​​your business on this very favorable price perhaps, as a rule, to professional investors specializing in the acquisition, development and further sale of a business. These can be local businessmen involved in everything that brings money, and representatives of large companies.

Therefore, if you consider your business profitable and promising, feel free to contact large investment companies and diversified holdings of oligarchs with an offer. Surely they do not know about your existence and, if they are interested, they can give a fair price that is beyond the reach of competitors of your level. You can also advertise on specialized bulletin boards or business portals. Today in Russia there is a lot of money, the owners of which are looking for investment objects.

What is the investor thinking?

Any investor, whether it is an investment fund or your neighbor, thinks about how quickly the invested funds will pay off and begin to generate income. By the way, this is one of the most effective, but at the same time a simple and logical way to assess the value of a business. Professional appraisers would see elements of the "profitable" method in it.

In the late 1990s and early 2000s, an attractive payback period was in the small and medium, and sometimes in big business Russia 1.5-2 years. As the value of the business increased, the payback period increased to 2-3 years. And in large - and up to 5. In the West, the standard is a period of 7-8 years, which is quite reasonable, given the lower cost of credit resources.

The payback period is directly affected by several factors. Firstly, the total cost of the business, its scale - the more expensive the longer you have to wait. But then every month there will be a much greater return.

Secondly, the value of the credit rate - the higher it is, the faster the business should generate income. Otherwise, bank deposits will become a more attractive alternative than buying a ready-made business.

The third factor is the rise in prices for real estate, land and, accordingly, the cost of rent. Land and real estate are becoming more and more expensive, their share in costs is increasing, which leads to an increase in expenses not related to business development, and therefore reduces overall profitability and lengthens the payback period.

The fourth defining moment is the turnover cycle. The shorter it is, the less working capital and funds are required to start and, consequently, the time to recoup the money. It is one thing to sell newspapers and magazines, and another to do construction and repair work. Although the profitability is almost the same.

In practice, the calculation is simple. Let's say your two outlets(standard kiosks) give 120 thousand rubles. net income per month. The kiosks are owned by you, but built on rented municipal land. They are not considered full-fledged real estate objects, they appear as temporary structures, and they will not let you buy the land under them, but they can be withdrawn at any time for city needs. Therefore, as an asset, they do not represent independent value. In this case, a reasonable selling price of your business, given the profitability and short turnover period, may be equal to the amount of profit that you receive in a period of one to two years - from 1.44 million to 2.88 million rubles.

Many large companies also adhere to the temporary principle. For example, the Tander company, which owns a chain of stores retail"Magnet" adhered to the following tactics - opening a store in a new place, the company waited 4 months. If the store began to pay for itself, they left it. If not, closed.

For the price of an entrance ticket, or draw up a business plan

Estimating the value of a business depending on the payback period is, of course, convenient and simple, but it misses several important things that could increase its price. First, how much do similar offers cost on the market, and how much time and money would it take for a buyer to create and develop such a business on their own? It is quite possible that for you personally, thanks to connections in the mayor's office or equipment or premises bought on the occasion, the business cost much less and you developed faster. Selling based only on the payback period would be illogical. Therefore, it is useful to at least roughly estimate the cost of the "entry ticket" from scratch.

Calculate how much you would have spent by the time of the sale at current prices of money on rent, purchase of equipment, advertising, what would be the total amount of costs until the moment of the first profits. Simply put, draw up an approximate business plan, but taking into account your knowledge of all the nuances. Such an approach is called "costly" by independent appraisers.

A business plan, even the simplest one, will help you convince a potential buyer that your business is worth buying. Try to include all your strongest competitive advantages in this business plan for the client. For example, in your hairdressing salon the best masters in the district work, for the sake of which people come to you who are ready to overpay for quality. Or that you have the best imported equipment in the area for the production of bakery products or dumplings.

A good name is worth a lot

Surely you are not the only one who is going to sell a business like yours. Naturally, a potential buyer will compare all available offers, and most likely, elements of the so-called "comparative" approach will be required here. The accuracy of the estimate depends on the quality of the collected data, since, using this approach, it is necessary to collect reliable information on recent sales of comparable properties.
This data includes: economic characteristics, time of sale, location, terms of sale and terms of financing. For example, it is one thing to sell a business for cash, another thing is to sell it on credit.

The effectiveness of the comparative approach is reduced if there were few transactions or a lot of time passed between them; if the market is in an abnormal state, as rapid changes in the market lead to distortion of the indicators. For example, a new head, a well-known lover of the redistribution of property, was appointed (elected) in a district or city. Or, as in Sochi, they decided to hold the Olympic Games.

In order not to suffer much with a comparative assessment of a business, you can resort to an analysis of franchise offers similar to your profile, which indicate the requirements for a franchise buyer. The main one is the amount of investment for the business to operate and develop. Simply put, the franchisee is asking you to work with their technology, brand, style, and so on. The franchise can be sold to almost any type of small and medium-sized business: sushi delivery, travel agencies, restaurants, stamp shops and real estate agencies, etc. Type in "franchise" or "franchise directory" in an Internet search engine and you will find hundreds of offers indicating the amount needed to start a business.

At the same time, the comparative approach allows you to focus on your individual characteristics, on the intangible assets created during your work. Western economists, and now Russian ones, use such a concept as "goodwill" (goodwill - good will).
Goodwill is essentially a combination of those elements of a business or personal qualities that encourage customers to continue using the services. this enterprise or this entrepreneur, and which bring profit in excess of that which is the source of tangible, as well as intangible assets, subject to an accurate assessment in monetary terms.

It is said to occur when you make a profit higher than the average in this area of ​​\u200b\u200bbusiness, that is, people are predisposed to buy from you.

Goodwill includes a favorable location, an established clientele, and credibility. individual workers. This factor cannot be felt and calculated, but it is necessary to evaluate. Indeed, the development of any business is based on good relations, that is, the good will of sellers and buyers. And your task is to convince the buyer of your business that you have earned goodwill, and it is not in vain that he pays an additional 10-20 percent for a promising and promoted business.

When You Can't Do Without an Appraiser

Having fired a couple of arrows in the direction of the institution of professional appraisers, for the sake of truth it is worth noting that in practice there are moments when you simply cannot do without professional appraisers.

First, when arguing with tax office about the market value of the object of purchase and sale in the form of real estate. For example, you bought a room for a workshop for 3 million rubles, and the tax authorities, in accordance with Article 40 of the Tax Code, having the right to control prices to determine the taxable base, they say - you, brother, underestimated the cost of the room and did not pay extra taxes.

This is where the conclusion of a professional appraiser helps in a dispute with the inspection, which will become an argument for setting the transaction price corresponding to the current market value. The opinion of a professional has the status of an official document and can be used in an arbitration court as convincing evidence in cases involving the determination of the completeness and correctness of the calculation and payment of taxes. In addition, sometimes it is beneficial to officially revalue the property of the enterprise downward, which helps to save on property tax.

The second category of partners of an entrepreneur, in relations with which the opinion of appraisers can be useful, are banks. By issuing secured loans, banks try to underestimate the value of the mortgaged property. Determination of the real market value of the property by an independent appraiser allows establishing a fair ratio between the value of the pledged property and the amount of the loan. In case of non-repayment of the loan, the official conclusion contributes to the prevention of disagreements between the parties to the transaction that arise when foreclosing the pledged property.
Professional appraisers are a great help even if you use the services of insurance companies. There are several hidden points that insurers prefer to remain silent about.

A case from one's life. The entrepreneur insured for a fairly decent amount acquired by him warehouses. But when the fire broke out Insurance Company offered a much smaller amount to be paid than was indicated in the contract, stating that, on the basis of current legislation, the contract is void in terms of the excess of the sum insured over the actual (market) value of the property. It was of course impossible to determine in hindsight how much the burned warehouse cost. At the same time, the overpaid insurance premium was not returned to the entrepreneur.

If, at the time of concluding the insurance contract, the entrepreneur was armed with the conclusion of the appraiser, there would be no problems - the examination carried out by an independent appraiser categorically does not allow the insurer to subsequently dispute the sum insured under the contract.

There are other times when professional valuation helps entrepreneurs. Among them, it should be noted the assessment of damage in the event of an insured event, as well as damage to the property of the entrepreneur or third parties. Knowing how much you really lost, you will be able to clearly justify your position in a controversial situation, including in a lawsuit.

D. Protasov, business consultant
Magazine "Modern Entrepreneur. Individual approach to business", N 3, March 2008