valugenius.in-How to Calculate Valuation of a Company Shark Tank Style

1. How to Calculate Valuation of a Company — Shark Tank Style! valugenius.in/blog/how-to-calculate-valuation-of-a-company-shark-tank-style @Valugenius Ever watched Shark Tank and wondered how founders just throw out numbers like “We’re seeking ₹1 crore for 10% equity,” and the sharks instantly start calculating? That number is called valuation — and it’s more than just a guess. In real life, and especially in India’s growing startup ecosystem, business valuation is serious business. Whether you’re pitching to investors, selling your company, or just planning your next financial move, knowing how much your company is really worth is essential. That’s where ValuGenius steps in — one of the most trusted financial planning companies in Mumbai, helping you decode valuation like a pro (without needing a finance degree!). 1/6

2. What is Valuation in Simple Terms? Valuation is like figuring out the price tag of your business. Imagine if your company were a pizza — valuation tells you how many slices it’s worth and what each slice costs. It helps investors decide: Is this pizza worth buying? In financial terms, valuation of a company is the process of finding its fair market value — based on assets, profits, cash flow, and other performance metrics. 2/6

3. Why Valuation Matters (Especially in India) Startups in India are booming — but over 70% of founders overestimate their worth during funding rounds. Accurate valuation helps in: Attracting the right investors Planning business exits or mergers Taking better financial decisions That’s why smart businesses work with experts like ValuGenius — a leader in valuation business in India. How Do Sharks (and Investors) Calculate Valuation? There’s no one-size-fits-all formula. But there are 3 main methods used in India and globally. Let’s break them down simply: 1. Asset-Based Valuation (Net Asset Value – NAV) This is like calculating what your business would be worth if you sold everything today. 3/6

4. Formula: Valuation = Total Assets – Total Liabilities Best for businesses with lots of physical assets (like factories or real estate). 2. Income-Based Valuation (Discounted Cash Flow – DCF) This one is about future earnings. It’s like saying: “If my business will make ₹X over the next few years, what’s that worth today?” Formula: DCF = Future Cash Flows ÷ (1 + r)^n Where: r = interest rate or Weighted Average Cost of Capital (WACC) n = number of years in the future Best for startups or growing companies with strong future projections. 3. Market-Based Valuation (Comparative or Relative Valuation) This is Shark Tank’s favourite. You compare your business to others in your industry using valuation multiples like: ➤ PE Ratio (Price to Earnings) PE = Share Price / Earnings Per Share Use when the company has steady profits. ➤ PS Ratio (Price to Sales) PS = Share Price / Revenue Per Share Helpful if your business doesn’t have profits yet. ➤ PBV Ratio (Price to Book Value) PBV = Share Price / Net Asset Book Value Common in banking and asset-heavy industries. ➤ EBITDA Multiple EBITDA Ratio = EBITDA / Net Sales Gives a clean picture by excluding interest, tax, depreciation. 4/6

5. Quick Example (Shark Tank Style) Scenario: You pitch to investors and say your business is worth ₹5 crore. They ask: Why? Case 1: Asset Approach You own machines, computers, and stock worth ₹2 crore. You owe ₹50 lakhs. Your valuation = ₹2 crore – ₹0.5 crore = ₹1.5 crore Shark’s thought: Too low — your valuation doesn’t match your ask. Case 2: DCF Approach You’ll make ₹1 crore/year for 5 years, and the discount rate is 10%. Your valuation = ₹3.8 crore (after discounting future earnings) Shark’s thought: Okay, now we’re talking! Common Mistakes Founders Make Overvaluing based on hope instead of data Ignoring market comparisons Not knowing key ratios like PE or EBITDA Forgetting liabilities and debts With ValuGenius, you get expert insights and personalized company valuation reports that investors trust. No guesswork, just smart numbers. Why Choose ValuGenius for Valuation in India? Trusted by startups, SMEs & corporates Real-time market data & ratios Transparent & audit-proof methods Based in Mumbai, helping founders across India & globally Whether you’re pitching in a boardroom or on a Shark Tank stage, ValuGenius helps you know your value before you show your value. 5/6

6. In Summary: How to Calculate Company Valuation Method Best For Quick Formula Asset-Based Asset-heavy businesses Assets – Liabilities Income-Based (DCF) Predictable future earnings Future Cash Flows ÷ (1 + r)^n Market-Based All-round use, especially startups PE, PS, PBV, EBITDA multiples Ready to Value Your Business? Whether you’re dreaming big, raising funds, or planning an exit — valuation is your first step to serious growth. — Mumbai’s leading name in financial planning and valuation business in India. 6/6