1. What is business valuation?
2. Why is business valuation needed?
Value is the first thing people want to know about a product. If you are a business owner and you know what your company’s assets are worth but not the market value of your business, you are missing something extremely important.
Business valuation brings many benefits to owners: it helps protect the business and reveals its capabilities so that adjustments can be made to improve business and production efficiency… Most importantly, business valuation is an important basis for attracting capital from financial investors.
Business valuation arises from the needs of mergers, acquisitions, consolidations and demergers. Such transactions occur regularly and are common in a market economy. With M&A activity as vibrant as it is today, business valuation is becoming ever more important.
These transactions require a broad assessment of the factors affecting the business. Among them, the value of the business is a decisive factor and the direct basis for negotiations between the parties in the course of a merger, acquisition, consolidation or demerger.
From the investors’ perspective, a business valuation certificate is an overall assessment of a company’s business reputation, financial capacity and credit standing. On that basis, they can decide whether to invest in, finance or continue extending credit to the business.
