"What is the worth of my company?" This question arises not only when buying or selling a company – but then at the latest. Unfortunately, there is no concrete and objective corporate value. As with the stock market, the value of a company in buying and selling is reflected in supply and demand. Nevertheless, it is important to get an initial idea of the potential value of a business.
As a rule, we use three standard valuation methods in parallel, which lead to different valuations and give a first indication of possible minimum and maximum values.
The three common methods we use are:
- IDWS1 - For this purpose, the future cash flows to be determined from a corporate planning are discounted to the valuation date.
- The simplified income method according to BwG – here, averages are calculated from the operating results of the last 3 years and extrapolated to the future.
- Multiple procedures – from a comprehensive consultant database (e.g. Finance Multiples) marketable multiples are applied to the EBIT or the sales and from this minimum and maximum values are determined.
Prior to a possible sale or purchase, we recommend rating the company using the procedures presented. We would be glad to assist in this process.