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Companies evaluate its capabilities in. Business valuation: goals, approaches and methods for determining the value of an enterprise. Company valuation is required

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From this article you will learn:

What is the value of the company and why is it needed

What are the types of company value?

How to calculate the value of a company

How to quickly calculate the value of a company

What are the features of company value management

How to increase company value

A business exists not only to receive funds for the goods or services for which it was created. Business is also an investment. Many entrepreneurs make money on the organization and launch of new companies with a view to their further sale. Although this is far from the only reason for selling a business. When a firm goes bankrupt or cannot solve its problems on its own, there is often a need to assess the value of the company before selling. In this article, we're going to talk about how to sort out everything related to the cost of your business and avoid difficulties.

Why you need to know the value of the company

Now the vast majority of firms in Russia do not consider the valuation of the company to be something necessary, and their owners often do not see the point in this until the business enters large turnovers and the public arena. Prior to that, the assessment is perceived as a reason for the personal pride of the owner.

The economic goals of calculating the value of the company are actually about twenty, but only three important:

This provides objective data on the state of the business and the effectiveness of the administrative apparatus in it. Reacting to them, the owners can always correct the course in time.
It is impossible to apply for additional cash injections from investors without knowing the true value of the company, otherwise you risk not getting what you came for.
Valuation allows you to correctly and competently take into account the assets that have arisen in the course of the economic activity of the company.

Of course, valuation is necessary not only for buying or selling ready business. This indicator is important for strategic management company. A clear understanding of the value of your enterprise will also be required when issuing securities, shares and entering the stock market. It is also significant that not a single investor will agree to invest his money where the company's value has not been assessed.

Enterprise business valuation (business valuation)- nothing more than determining the value of the company as non-current and current assets that can bring profit to the owners.

During the appraisal to estimate the value of the company's assets:

real estate,
equipment and machines,
stocks in warehouses,
all intangible assets,
financial investments.

Business is an investment commodity. Any investment in a company is only made with the long-term goal of a return on investment with a profit. Since quite a lot of time passes between investments and income in a business, to determine the real value of a company, a specialist analyzes its activities over a long period and separately evaluates:

past, present and future income,
the efficiency of the entire operation of the enterprise,
business outlook,
market competition.

After receiving these data, the company being valued is compared with other similar firms. Only a comprehensive analysis helps to calculate the real value of the company.

Estimating the value of an enterprise or company- is the process of finding out the maximum probable price of a business as a commodity when it is sold to other owners. At the same time, any enterprise can be sold as a whole or in parts. The company, as the property of its owner, can be insured, bequeathed or used as collateral.

What are the types of company value?

The activity of the appraiser is regulated by the federal standard "Purpose of valuation and types of value"(FSO No. 2), which defines several main types of value of any appraisal object:

Market price.

The market value of the object being valued, for example, a business, is the most probable price at which it can be sold on the day of valuation under the following conditions: open market with the existing competition, the participants in the transaction act reasonably and have full information about the subject of the sale, and its value is not affected by any force majeure circumstances.
The market value of the company is needed in the following cases:

when the property of the company or the enterprise itself is seized for state needs;
when the price of outstanding shares is determined, which the company buys by decision of the meeting of shareholders or the supervisory board;
when it is necessary to determine the value of the company acting as collateral, for example, in a mortgage;
when the size of the non-monetary part is determined authorized capital firms;
when the owner goes through bankruptcy proceedings;
when it is required to determine the amount of property received free of charge.

The market value of the company is applied in all situations where tax issues are resolved, both federal and local.

Just this type of value is always determined in transactions for the sale of a business or any part of it, since the market value is the most objective indicator and does not depend on the desires of the participants in the process, it corresponds to the real economic situation.

Investment cost- such a value of the company, which is associated with the profitability of the enterprise for a particular investor in the existing conditions.

This type of value depends on personal investment requirements. Every investor invests in a business in order to make a profit in excess of the amount of invested capital, and not just return this "debt". So the investment value of the company is calculated based on the expected return of the investor and the capitalization rate of these investments. This type the value of the company must be calculated when buying and selling a business, merging, acquiring firms.

Liquidation value.

This cost option is calculated in a situation where the end of the company's work is expected for any reason (for example, reorganization, bankruptcy or division of the company's property). Determining the liquidation value of the company, they find the most probable price at which the company can be sold for the shortest time exposition, provided that the owner of the object of sale is forced to make a deal to alienate his property.

Cadastral value.

This is the market value approved and established by the legislation in the field of cadastral valuation of real estate. It is to this indicator that mass valuation methods should come in the case of the cadastral value of an object. This type of value is calculated most often for property taxation.

What documents are needed to assess the value of the company

Duplicates or copies constituent documents enterprises.
Documents on the inventory of the company's property.
Written confirmation of the structure of the company and its economic activities.
For joint-stock companies, duplicates of securities issuance reports and copies of prospectuses will be required.
Documentation on fixed assets.
If there is real estate on lease, then copies of the contracts must be submitted.
To assess the value of the company, accounting reports for 3-5 years are required - about all the profits and losses of the business.
The final conclusion of the audit, if it was carried out at the enterprise.
A detailed list of all assets: tangible and intangible, in shares, promissory notes, etc.
Breakdown of accounts receivable and accounts payable.
If the firm has subsidiaries, then it is necessary to collect information about them and submit financial documentation for them.
A ready-made business development plan for the next 3-5 years, containing potential gross revenue, investments, expenses and net profit calculation in each next year.

This is a preliminary list of documents that an appraiser will need to conduct an examination of the company's value, but it can be reduced or supplemented at the request of a specialist.

How to find out the value of a company

Obviously, one of the most objective performance indicators operating business is its cost. It makes it possible to calculate the price at which the enterprise can be sold on the open market in a competitive environment, or to assume the future value of the benefits of the firm. The question of how a company's value is assessed is a serious one. practical task of great importance for any entrepreneur.

In order to obtain an adequate assessment, it is first of all worth define the main goal costing procedures. The most likely options are:

Determining the value of the company was required to perform some legal actions. In this case, they turn to a licensed independent appraiser, who draws up his opinion in the “Appraisal Report”, regulated federal law № 135.
You need to find out how much your business is really worth in the market, in this situation the official “Valuation Report” is no longer needed.

The fundamental difference in carrying out these procedures is not in the quality of the appraiser's work, but in the cost of services and in the form of a conclusion. In the first case, the specialist must comply with the requirements current legislation governing its licensed activities, and usually these requirements significantly increase the price for the work.

In the second case, you will need to independently develop and clearly formulate a task for the appraiser, listing all the procedures you are interested in, the company's value factors and parts of the business that are subject to examination. So as a result, you will receive only the information that you need.

Business valuation means calculating its value as property complex which results in a profit for the owner.

To calculate the value of a company, you need to take into account all its assets, intangible and tangible: real estate, technical equipment, cars, stocks, financial injections. Further, past and potential incomes, plans for the development of the enterprise, competition and the economic environment are necessarily calculated. At the end of a comprehensive examination, the data is compared with information about similar firms, and only after that the real value of the company is formed.

For these calculations, apply three methods:

profitable,
costly,
comparative.

However, in fact, there are so many situations that they are segmented into classes, each of which requires its own approach and corresponding method.

To use the most appropriate calculation method, you must first analyze the situation, the circumstances of the moment of assessment and other conditions.

For some types of business, the valuation of the company is carried out, as a rule, based on commercial potential.

For example, in the case of hotel business we deal with guests as a source of income for the company. In a method called profitable, it is this source that will be compared with operating expenses to assess the profitability of the enterprise. This method is based on discounting the profit from renting out the company's property. In conclusion, after the assessment, both the cost of buildings and land are included.

The value of a company is assessed using cost method when it comes to a business that is not subject to sale and purchase, as is the case with government agencies or clinics. This appraisal takes into account the price of construction of the building, depreciation and depreciation of the property.

Comparative method apply when there is a market for such a business. This is a market method of valuation, which is based on the analysis of already sold similar properties in other markets.

Hypothetically, all of the above approaches must give the same value. But actually market conditions are not ideal, enterprises are often inefficient, and information is insufficient and imperfect.

Determining the value of the company in each of these approaches allows use of different evaluation methods:

For the income approach, these are:

capitalization method, which is used in the case of established companies that managed to accumulate assets in previous periods;
cash flow discounting method for a young business that will develop in the future. Used when a company has a potentially promising product.

The cost approach uses:

method net assets- when it comes to reducing output or closing a business at the initiative of an investor;
and the salvage value method of the company.

For a comparative approach, these are the methods:

transactions, which is used in situations similar to the conditions for applying the net assets method;
industry coefficients, which evaluates operating enterprises that do not plan to close in the period after the examination;
capital market. This method is also intended for "live" companies.

Please note that the last three methods are valid only if there is a similar business that matches the type of the object of assessment, otherwise the analysis will not be indicative. Next, we will briefly talk about the use of these methods, by which the value of the company is calculated.

If you require a cost estimate for the forecast period, it will be determined discounted cash flow method. A discount rate is applied to bring the potential income to the present value.

In this scenario, the calculation of the value of the company is carried out according to the following formula:

P = CFt/(1 + I)^t,

where P- price,

I- discount rate,

CFt– cash flow,

t is the number of the time interval in which the evaluation takes place.

Do not forget to take into account that in the period after the forecast, your company will continue to operate, which means that the future prospects will determine a wide variety of options - from the explosive growth of an enterprise to bankruptcy.

It happens that calculations are carried out using Gordon model, implying a stable and systematic growth in sales and profits of the company, as well as equal volumes of capital investments and depreciation.

For this situation, the following applies. formula:

P = СF (t + 1)/(I− g),

wherein CF(t+1) is the cash flow in the first year following the forecast period,

I- discount rate,

g– flow growth rate.

The Gordon model is most convenient to use when calculating the value of a company if the object of assessment is a large business with a large market capacity, stable supplies, production and sales, located in favorable economic conditions.

If the bankruptcy of the enterprise and the further sale of property are predicted, then this formula is required to calculate the cost:

P = (1 −L cf) × (A-O) -P liq,

where P- company value

P liq– the costs of its liquidation (such as insurance, the services of an appraiser, taxes, employee benefits and management costs),

O– amount of liabilities,

L cf– discount provided in connection with the urgency of liquidation,

BUT- the total value of all assets of the company after their revaluation.

The results of calculations according to the current formula are also affected by the location of the enterprise, the quality of assets, and the situation on the market as a whole.

Quick calculation of the company's value using express valuation

Rapid valuation model, which we will talk about in more detail, is based on the method of discounting the cash flow for the enterprise already known to us. For convenience, we will abbreviate this term as DDP method For the company. These concepts, as we remember, operate in the income approach to the assessment of the company.

This approach is divided into the following most common in it assessment methods:

method of calculating economic profit;
DDP method;
real options method.

According to a lot of information, both direct and indirect, the DCF method is the most adequate in determining the value of a company. Provided that the criterion for the effectiveness and expediency of the method, we choose the display of behavior stock market(for example, the capitalization of an enterprise according to its data).

Important, that DDP method has several varieties, corresponding to different purposes and differing in the methods of calculating both the flow itself and the discount rate. We list the most popular varieties:

DCF for equity joint-stock company (Free Cash Flow to Equity);
discounting DP for the company (Free Cash Flow to Firm);
and another type of cash flow discounting - for capital (Capital Cash Flow);
adjusted present value (Adjusted Present Value).

At the same time, the entire DCF method for an enterprise is based on this formula:

in which indexes i and j the serial numbers of periods (years) are indicated,

EV(Enterprise Value) - the value of the company,

D(Debt) - the cost of short-term and long-term debt,

FCFF stands for "free cash flow for the firm", excluding debt financing left after taxes (or operating cash flow),

E(Equity) is the amount of equity capital of the organization,

WACC(Weighted Average Cost of Capital) is translated as "weighted average cost of capital", which is calculated as follows:

rd- the cost of the company's capital, which is borrowed,

t- income tax rate,

r e- the amount of equity capital.

When calculating the value of companies in Russia, often the following simplifications are introduced:

Weighted average cost of capital WACC can be referred to as the discount rate - r. This move does not destroy the adequacy of the formulas, since for business in Russia, the calculation WACC is not always possible. Because of this, analysts resort to other calculation options.
And let's say that the variable r is constant throughout the years. This is due to the fact that the definition of this indicator in Russia, even for one specific year, causes big problems and leads to a methodological stupor. So, if we do not introduce such a simplification, then we will unnecessarily complicate the entire model of express valuation of the company's value.

As a result of all the above transformations we get the expression kind

Company value factors within the described valuation model are any scalar values and vectors that affect the value of the enterprise in the calculations.

Note that forecasting a firm's free cash flow for each year of an infinitely long period is difficult and makes little sense. This happens because the value of the terms with the index i too small due to the denominator, and the imperfect calculation of the numerator has almost no effect on the final result of this calculation. For this reason, the following popular practical an approach:

the value of the company is divided into the forecast period and the post-forecast period;
in the first period, cost factors are predicted based on assumptions and plans for the further development of the enterprise;
in the post-forecast period of time, cash flows are estimated based on the hypothesis of a fixed rate of their growth throughout the entire period.

Company valuation: typical mistakes

Everyone who has dealt with valuation services is well aware that the way they are calculated has a significant impact on the market value of the same business being valued. The resulting amounts may vary by several times. Such results often lead to serious financial damage, conflicts and even litigation.

Let's call several main reasons for the variation in the value of the appraised object:

methodological errors.

Inadequate value is obtained as a result of errors in the calculation, as well as due to methodological inconsistencies in assessing the value of the company. Carefully study the experience and professional level of the appraiser.

Deliberate misrepresentation of value.

Unfortunately, to this day, a certain share of the market for services for the evaluation of various objects is occupied by "custom" examinations. That is, the real cost can be underestimated or overestimated in the expert's opinion at the request of the customer.

subjective expert opinion.

Although the estimation procedure is based on specific values and economically sound assumptions, in many respects this process remains subjective. So the result may depend on the appraiser's personal view of the future of the market, financial opportunities and other factors of the company's value. The decision on how to deal with economic conditions is up to the analyst doing the analysis. And not always he will be able to predict even the most seemingly predictable things. Judge for yourself: who could predict the development of the oil market two or three years ago at $66 per barrel, and not at $25 or even the optimistic $30 per unit?

Wrong assignment.

The amount of the final cost that will be obtained as a result complex analysis and calculations, largely depends on the correct formulation of the problem, on the accuracy and adequacy of the choice of the type of cost and on the ultimate goals for which the entire procedure is carried out. It is not surprising that the same security can be valued by amounts that differ by 20 or even 50%. This is influenced, for example, by whether it is in a minority or a controlling stake. Depending on the purpose of determining the value of the company, the calculation process is carried out in different ways.

Distortion of official reporting.

The management of some enterprises deliberately goes for a discrepancy between real and official reporting. And the distortion of this factor of the company's value inevitably leads to incorrect valuation results. This problem is even more aggravated in the case when it is necessary to make a settlement for the business, the share of which is pledged when receiving credit funds. Banks prefer not to work with management reporting, but only with the official one, which significantly changes the assessment indicators.

Legislation flaws.

Today, experts in the field of valuation refer to three main methods of this procedure - costly, profitable and comparative. The official evaluation standards state that the final calculation must take into account the results obtained in all three approaches. But these methods do not always correspond to the objectives of the examination.

List of factors to consider, in order to clarify their meaning and get comments from an expert conducting a company valuation:

The cash flow forecast based on the results of the analysis, and the discount rate that reflects the cost of raising third-party capital, - with an income approach.
The cost of all intangible assets (including those that are not included in this category according to the legislation Russian Federation) – with a cost approach.
The adequacy of the multipliers (price ratios) and the comparability of the company-analogue with which the comparison is being made - with a comparative approach.

Recently, transactions for the purchase and sale of small businesses (enterprises with an annual turnover of up to $ 1 million and the number of employees up to 150 people, hereinafter abbreviated as MB) show rapid growth: more than 50% of MB enterprises change their owners during the first 3 years of their existence , with 30% of them doing so annually. In this regard, the issue of an objective assessment of the cost of MB is of particular relevance. The relative complexity of this issue is due to the fact that in any assessment, to a certain extent, there is subjectivity, which is expressed in the desire to sell more expensive or buy cheaper the business or its share being valued. In this article, we will consider ways to determine the cost of MB, which allow how to justify it high cost when selling, and to assess the investment potential of the MB when buying it.

Methods for estimating MB
The variety of assessment methods used is too great to give a complete and detailed analysis of all existing methods. In order to be able to evaluate the MB, it is enough to know 4 methods that can be used both separately and in combination with each other:

1) Replacement cost method
This method is based on the calculation of the cost of creating an enterprise comparable in terms of financial performance, market position, existing customer base, established relationships with suppliers, staff with the enterprise to be assessed. In other words, the appraiser calculates what it would cost to create such a business if the buyer were to create such a business from scratch. Then, as a rule, a discount (discount) from the received replacement cost is taken to justify the attractiveness of the price requested by the seller (20-30%). The use of the replacement method leads to a high appraised value of the business, since it allows you to include in the appraised value almost all the costs incurred by the current owner of the business during the entire existence of the enterprise.

2) Book value method
This method is the easiest to use, as it allows you to evaluate the company according to the balance sheet: for this, it is enough to calculate the value of the assets that the company has, taking into account their depreciation, and subtract the cost of its liabilities from the amount received. This method is often called liquidation: in fact, it shows how much Money can be removed from the enterprise if its activities are terminated, assets are sold, and the money received can be used to pay off debts. The book value method is considered the most conservative valuation method, since it does not take into account many aspects of value that the buyer receives free of charge if this method is applied (for example, the same intangible assets). However, this method can also make sense for the seller if the company has a high book value of assets, but cannot boast of a significant cash flow.

3) Method of discounting cash flow (Discounted cash flow (DCF)method)
This method is based on an assessment of the financial results of the enterprise, in the first place - its cash flow. Most often, cash flow is understood as the net profit of the enterprise (after paying interest and taxes) erected (increased) by the amount of depreciation. Discounting is a financial transaction that allows you to determine the present value of future money. It is based on the idea that money today has more value than money received tomorrow. For example, $1,000 that you will receive in a year is not worth $1,000 today, but $1,000/(1+7%) = $934, because if you put $943 in the bank today at 7% per annum, then in a year you will get 1000$. Therefore, the fair value of the future cash flow should not exceed the amount that I can invest today with less risk and get the same result. 7% in this example is the discount rate, usually equal to the return on risk-free investments (in our example, the return on bonds of the Ministry of Finance of the Republic of Belarus). To use enterprise cash flow discounting, you must define the period to be discounted. It depends on how much payback you put into the project. That is, if you want to demonstrate to an investor that his investment will pay off in 3 years, you need to discount the cash flow for this period. The value of this method lies in linking the value of the business with variables such as payback and return on risk-free investments.

At the same time, one should not regard the value of a business obtained by this method as its actual price. If you say that your business is worth as much as an investor will receive in 3 years on a risk-free investment, then any reasonable investor will consider this business overpriced because with a comparable return, he will always choose less risk. Therefore, discounting should be considered as a way to determine the "ceiling" of the cost and understand that the actual value of your business should not exceed it. Moreover, you need to show that internal norm the return on the business is greater than the return on risk-free investments (i.e., the presence of a return premium) so that its acquisition makes investment sense. Either way, the discounted cash flow method is appropriate for valuing a cash-generating business, and its value is determined by the fact that it allows the fair value of the business to be judged in the most sensible way to invest. I recommend that business buyers, in conjunction with the use of this method, analyze the income and expenses of the enterprise in order to assess the reliability and stability of the enterprise's cash flow, as well as assess its financial stability (margin of safety).

Intangible assets
Often, the valuation of the intangible assets of the business is used to justify the higher value of the business, especially when using the book value method. Some intangible assets (hereinafter - intangible assets) can be reflected in the balance sheet - most often this happens if the occurrence of intangible assets was associated with expenses that had to be posted to accounting accounts. However, it would be erroneous to assume that the balance sheet fully reflects the list of intangible assets that the enterprise has and their actual value. Most often, the balance sheet indicates only a small part of the obvious intangible assets and their nominal value, which may differ from the actual one. The other extreme is to classify certain functions and elements of the business as intangible assets: employees, customer base, suppliers, business processes, and in general everything that can have at least some value in the eyes of a potential buyer. It is also difficult to call this approach objective, since it aims to sell the same enterprise twice: the first time as a material object, the second time by dividing it into intangible assets. If the seller talks about intangible assets in this way, he is most likely trying to justify the asking price, which he failed to link to more real assets. An objective approach to accounting for intangible assets is to identify intangible assets that are not reflected in the assessment of the material base of the enterprise and which have an independent value in the context of a sale and purchase transaction. These intangible assets are:

1) Special permits (licenses) and certificates
The value of these intangible assets lies in the fact that they significantly expand or vice versa are a necessary requirement for the scope of the enterprise. Their cost is determined by the principle of substitution: about how much such permits would cost you if you wanted to get them yourself, you will be prompted by any law firm.

2) Trademarks, patents, copyrights, other objects of intellectual property
The peculiarity of these intangible assets is that they are an independent asset that can be used to reduce the tax base of an enterprise and reduce the cost of withdrawing dividends, not to mention receiving license fees from other enterprises.

3) Insurance policies
The value of intangible assets data lies in the insurance coverage provided by insurance policies paid for by the money of the previous owners. Of course, insurance coverage is paid upon the occurrence of insured events, which do not always happen, but still having insurance is certainly a positive thing.

4) Debt of the enterprise to the owners
Despite the fact that the debt of the enterprise to the owners, from the point of view of the balance sheet, is the obligation of the enterprise (its liability), it carries a value that forms a certain intangible asset. We are talking about re-issuing debt to new owners in order to use it to withdraw future dividends, which reduces the cost of withdrawing future dividends by 12% of the amount of debt.

5) Exclusive working conditions with suppliers and contractors
This intangible asset includes the discount percentage and payment terms that the company has in contrast to the standard working conditions available to any market participant. For example, an auto parts store may have a supplier discount of 35% off the retail price and a 15-day payment deferral, as opposed to a standard 25% discount and a 5 business day payment deferral. The cost of this intangible asset is determined depending on the volume of trade under these working conditions: with a turnover of $5K per month, such agreements can bring an additional profit of $500 and another $50 if the proceeds are deposited before the expiration of the grace period. As a result, in 12 months such agreements can bring additional profit of $6.6K, which, you see, is not a little.

6) Know-how
Sometimes the proposed acquisition company may have knowledge that allows it to be more effective in comparison with other similar companies. These can be standards, regulations, business processes, management and accounting principles, marketing tools. Of course, such knowledge is rarely formalized even in a simple written form, therefore, in order to distinguish it in the chaos of the enterprise's operations, it is necessary to have a fairly trained eye. However, isolated and put into proper form, this knowledge has great commercial potential - both for the enterprise itself and for any other in which it can affect efficiency.

7) The right to lease an office / retail facility
It is often the case that a business has a valuable office or retail location in terms of customer traffic or cost per square meter, resulting in an intangible asset such as a leasehold that can be transferred to another business for a fee.

8) Site, groups in in social networks
Intangible asset data is usually evaluated either in terms of the principle of substitution (how much it will cost to develop an analogue), or in terms of the number of hits generated per month. If we know such a statistic as average check, we can calculate the amount of revenue that these resources "make". However, it is worth remembering that both the site and groups in social networks are not only assets, but also liabilities that have their own expenditure side. In order to objectively assess the costs of maintaining and promoting resources, I recommend calculating the costs per 1 appeal, which will allow you to compare the result with the average check and draw a conclusion about the potential of this intangible asset.

9) Client base
The client base is usually positioned as the No. 1 intangible asset, however, this prioritization most often occurs when intangible assets are used to inflate the value of the business. Objectively, the client base forms an intangible asset when it is designed in such a way that allows you to apply certain marketing tools to it (for example, SMS mailing) in order to receive a certain number of customer requests as a result. From this point of view, the client base as an intangible asset is comparable to a website and groups in social networks.

Hidden obligations
If accounting for intangible assets in business valuation has become a common practice, then hidden liabilities rarely appear in business valuation. We are talking about certain tax, financial and legal aspects of the business that can lead to adverse consequences for the owner, which is reflected in the additional costs that arise after the implementation of the sale and purchase transaction and fall heavily on the shoulders of new business owners. The use of the term "hidden obligations" in relation to these aspects is explained by the fact that they exist at the time of the transaction, but are rarely detected by a standard audit of financial statements, as they require interdisciplinary knowledge. Here are some examples of hidden obligations:

1) Legal claims and lawsuits
The seller may or may not be fully aware of the legal claims and claims that exist at the time of studying the business, while they often carry not only accounts payable, but also penalties and legal costs of the plaintiff, not to mention that the legal costs will have to be borne by the enterprise itself - for the representation of interests and defense in court.

2) Potential fines
Sometimes an interdisciplinary business audit reveals the commission of various actions related to closer interaction with government bodies than ordinary business activity implies (importation of cars under Decree No. 6, obtaining rights to operate an unused real estate, issuance and transactions of purchase and sale of securities, foreign gratuitous assistance), which may be fraught with various violations and, as a result, a fine.

3) "Poison Pills"
"Poison pills" in legal practice are the clauses of contracts aimed at protecting the second party, which is expressed in the obligation of the enterprise to pay compensation in the event of unilateral termination of the contract or other actions undesirable for the party. The identification of these hidden obligations and their neutralization require a legal audit of the enterprise's contracts. A special case of the “poison pill” may be the copyright of the former owners of the enterprise for some inseparable part of it, which may eventually lead to a situation where the enterprise will be forced to pay a fee for the use of intellectual property or refuse to use it.

How to evaluate the value of a business?
Now that we have a broader understanding of business valuation methods, we can move on to formulating a strategy for determining its value. We will not use the cost replacement method, which leads to a clearly inflated cost. As a base, it is best to use the book value method, supplementing it with the value of the company's intangible assets. In parallel, we will determine the value of the business using the discounted cash flow method. As a result, we should have two scenarios: 1) the discounted value exceeds the book value + the cost of intangible assets; 2) book value + value of intangible assets exceeds the discounted value.

Purchase evaluation features
The peculiarity of the valuation when buying a business is that a) you know the value of the business (sales price) and you need to determine how justified it is; b) you need to check the accuracy of the information provided by the seller by financial results work of the enterprise and the cost of certain tangible and intangible assets. As in the case of a sale, when buying a business, you need to calculate the estimated value using the discount method and correlate the resulting value with the book value plus the value of intangible assets in order to understand which scenario we are dealing with. In the first scenario, it is important to determine how reliable the information provided by the seller is, whether the net profit value is correctly calculated, how stable the cash flow is.

If the business being assessed corresponds to the second scenario, it is necessary to carefully study the list of assets in the balance sheet for their objective (real) value, the list of liabilities for completeness (whether they are fully reflected in the statements) and their maturity dates. Even the correspondence of the asking price to the revealed value is not a basis for considering the quoted price as fair, since the liquidation value of the assets may actually be lower than the value that they have according to accounting data. In order to mitigate the risk, the asking price must contain a certain discount from the book value. In some cases, when the listed price exceeds the book price, the seller may say that the business has some goodwill (or that the business is worth more than its tangibles by virtue of being a business).

What is goodwill?
Goodwill is a financial term that means the difference between the market value of a business and its book value, in essence, it reflects the amount that the buyer is willing to overpay for ownership of the enterprise in excess of its book value. In other words, goodwill is the additional intangible value of a business that supplements its book value. In this context, goodwill is associated with intangible assets, which, in essence, constitute the content of goodwill. But since goodwill, on the one hand, is nothing more than manipulation from the point of view of accounting (let's not forget that it is used to justify the excess of the book value of the enterprise when buying it), it must in any case be related to intangible assets. If goodwill > 50% of the value of intangible assets, the cost this business I consider it overpriced< 50% — объективную, если гудвилл отсутствует вообще (при наличии НМА не менее 10-20% от базовой стоимости) — привлекательную для приобретения.

Conclusion
Thus, the business valuation technology depends on the purpose of the conduct and must take into account the reliability of the data provided, the book value of the enterprise, the generated cash flow, intangible assets and hidden liabilities. An interdisciplinary analysis at the intersection of accounting, financial accounting, tax legislation and jurisprudence can provide the necessary completeness of the analysis.

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Many people wonder how to evaluate the value of a business. There are many ways to do this. And in this review we will highlight some of them.

Using the Capital Market Method

Evaluation process entrepreneurial activity when using the capital market method, it includes such main aspects as:

The procedure for collecting all the necessary data.
Selection of an analogue organization.
Analysis of the financial part.
Calculation of estimated multipliers.
Selection of a certain value of the multiplier.
Determination of the final cost.

It is necessary to consider in more detail each of the listed stages, which will make it clear how to assess the value of a business.

Data collection and search for an analogue organization

Collecting the necessary data means obtaining such information that will clarify the issue of the actual cost of transactions with shares similar to the securities of the company being valued. You also need to find out all the necessary data on the reporting of the organization that is being evaluated. It is necessary to compare all indicators with analogue companies. It should be noted that the quality of the data obtained will have a strong influence on the valuation of shares using the capital market method.

How to evaluate a business by analogy? A selection of peer organizations is considered a key point in applying this approach. The main difficulty is that in many situations it will be necessary to compare those objects that, in principle, are not comparable with each other. To complete this stage, you need to familiarize yourself with some criteria. They are the following:

Industry affiliation.
Products that are manufactured at the enterprise.
End range.
production volumes.

Parameters that affect the reduction of the list of analogues

After that, the primary list is narrowed down, due to the fact that some companies refuse to provide all the necessary information. Also, a reduction in the list can occur due to the introduction of refinement parameters for comparison. Among them are:

The level that is typical for the diversification of production.
Market situation.
The size and nature of the existing competition.
Prospects for the growth of the enterprise.
economic risk.
The level of quality of management and so on.

First Steps in Entrepreneurship Valuation

To answer the question of how to assess the value of a business, financial analysis is needed. It implies a rather important technique with which you can determine the comparability of peer companies.

It is through the use of such an analysis that it is possible to determine the rating of the enterprise being evaluated in the list of similar companies. At this stage, the coefficients are checked borrowed money, estimate negotiable. It is also necessary to check all the statements for comparability and analyze all the coefficients.

On the next step in search of an answer to the question of how to evaluate the value of a business, it is required to determine what type of multipliers subject to assessment is optimal for assessing the entire organization as a whole. A multiplier is a coefficient that reflects the ratio between such parameters as the price of a business and financial performance. In practice, two types of multipliers are usually used: interval and moment.

What should be taken into account?

When calculating valuation multipliers, it is necessary to determine the value of shares for all enterprises that were selected as similar. At this stage, it will be possible to calculate the financial base for a certain point in time or as of the moment of assessment.

In order to conduct an analysis, you can use several multipliers at once and calculate several cost parameters at once. The choice of a particular parameter will depend entirely on the particular situation.

In order to determine the final value of the cost, it is necessary to choose a certain value of the multiplier, weigh all the intermediate results and make final adjustments.

The most time-consuming step in the evaluation

The most difficult step in finding an answer to the question of how to assess the value of a company is the choice of a certain multiplier value. It must be carefully substantiated and recorded in all reports on the evaluation of the shares of the enterprise. Due to the fact that there are simply no identical enterprises, the range of values for the same multiplier can be simply huge.

In such a situation, it is necessary to cut off all extreme values and start calculating the average parameter for a group of peer companies. After that, there is a need for financial analysis. The value of the final parameter obtained as a result will determine the position in the general list of the organization that is being evaluated.

Each multiplier has its own weight depending on certain information, on the degree of trust, on the objectives of the assessment and on specific conditions. As a result of weighing all this, a final value characteristic of the price of the company's shares will be obtained. It is this parameter that can be taken as the basis for further adjustments.

The final valuation of the company will require taking into account those non-productive assets that are available. In addition, if the results of the financial analysis revealed an insufficiency of working capital or an urgent need for investments, then the amount received must be deducted. You can also take advantage of liquidity discounts.

As you can see, this method is very complicated and time-consuming to use. All those results that will be obtained are completely dependent on the study. a large number similar companies. And this must be taken into account when evaluating your business.

What is the essence of the method of sales?

How to value a business for sale? You can also use the sales method to value your own business, which is based on taking into account the cost of acquiring a peer company or its controlling interest.

Basic hallmark, which the sales method has, compared to the above valuation method, is the type of the original price data. In other words, the sales method uses a parameter such as the cost of a controlling stake in securities, and not the price of just one share. Accordingly, using this method, you can answer the question "how to evaluate a business when selling."

Consideration of the company from the position of the property complex

You can use the cost approach when evaluating business activities. In this case, the organization will be considered from the position of the property complex, which is necessary for the implementation of any business activity.

The structure of the enterprise will include absolutely all types of property that are intended for profit. We are talking about land, buildings, structures, equipment, goods, debts, and so on. Using this method, you can answer the question "how to evaluate the effectiveness of a business."

The essence of this method lies in the fact that in the first place there is an assessment of all the assets of the company. After that, from the amount of money that was received, it is necessary to subtract the present value of those obligations that are characteristic of the company. As a result, a parameter will be obtained that fully demonstrates the value that characterizes the equity capital of the company being valued. For calculations, it is worth using the balance sheet data of the enterprise at the time of assessment.

The main advantage of this method is the use of reliable factual data on the state that is typical for the property complex of the enterprise. Among the shortcomings, one can single out the factor that the future opportunities of the enterprise in making a profit are not taken into account. In addition, some methods are highly complex and time-consuming to use.

However, regardless of all these shortcomings, the cost method of company valuation is the most relevant in a transitional economy. Especially if you compare it with profitable and comparative methods.

How to value a company that should be liquidated?

How to evaluate a business if liquidation or bankruptcy is planned? The residual value method should be used. It can also be used in a situation where there are sufficiently serious doubts that the company is capable of making high profits. Liquidation value refers to the net profit that the owner of the company is able to receive in the event of the liquidation of the enterprise and the closure of business activities, as well as the separate sale of all assets and settlements with creditors.

By using this method, you can get the minimum evaluation parameter. In addition, using this approach, it is possible to determine the level of the cost of entrepreneurial activity, which is the lower one.

Conclusion

In this review, some of the methods that are used for business valuation were given as an example. Naturally, there are many such ways. And they all apply in a variety of situations. In addition, the entrepreneur chooses the approach that is most optimal for his situation. I hope this review has helped you understand how complex and time-consuming the business valuation process is.

Instruction

For a qualitative assessment of the value of a business, it is necessary to estimate the entrepreneurial income, that is, the amount that the owner of the enterprise receives every month after paying employee salaries and taxes. In addition to company profits, entrepreneurial income may include wages owner, which he receives as CEO, as well as the wages of other family members in the firm.

Next, you need to find out whether the company operates on rented or on its own premises. If it uses , Russian investors consider it normal if the company's price is equal to 7-18 months. In some cases, for a number of reasons in the acquisition of a particular business, investors are willing to pay an amount equal to the profits of the past 24-30 months. Yield requirements for businesses that are offered with owned real estate are usually not that high. A value equal to the total income for a period of two to five years is considered acceptable.

When determining the real value of a business, use another important criterion - the quantitative ratio of those offered for sale to potential buyers. Over the past years in great demand used by companies in the service sector, businesses in the field of food, catering.

Next, you need to assess how high-tech the organization is. Firms are sold quite expensively, for the management of which one does not need to have specialized training. Thus, most investors regard car washes as companies whose development does not require costly and original marketing strategies, so buyers are willing to pay about 30 monthly profits for an enterprise.

Calculate everything possible risks. The absence of "dark" sides in the transaction for some buyers justifies the higher cost. Companies with completely transparent accounting will have a big price, even if not with very high profits.

Do not forget to evaluate the assets of the enterprise. In the presence of expensive and high-tech equipment, as well as real estate property, the salvage value of these objects must be added to the cost.

When determining the value of a business, consider trained staff and a stable client base companies. Also important is business reputation firms.

Factors affecting the value of the object

The value of the object being valued on the market can be stated as a calculated indicator, and its market price - as a result of the auction, of the form economic activity enterprise, the solvency of a potential buyer, the availability of other investment objects, etc. The cost is determined by profitability and profitability, socio-economic significance, uniqueness and other characteristics of the products, as well as by the work performed and the services provided.

Value results are based on the value of stock prices, reflecting the market's expectations of its future performance. Change in share prices (with a subsequent change in the added market value) determines the results of the activities of the enterprise management in this direction. There are many important factors that prevent stock prices from being used as the primary measure of value creation. The price level in the market can change and affect all rates. Changes in product prices can also affect the amount of capitalization.

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