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KNOW EVERYTHING ABOUT BUSINESS VALUATION BEFORE MAKING DECISIONS

Business valuation also aids in the development of long-term business strategies. Previous valuations might be utilized as benchmarks to help the firm strategize its growth ambitions. Business valuation is a key procedure that assists a firm owner in understanding numerous components of a business, making it useful to the owner.<br><br>https://www.slideshare.net/Karthik659628/know-everything-about-business-valuation-before-making-decisions<br><br>Business Valuation<br><br>

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KNOW EVERYTHING ABOUT BUSINESS VALUATION BEFORE MAKING DECISIONS

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  1. WELCOME KNOW EVERYTHING ABOUT BUSINESS VALUATION BEFORE MAKING DECISIONS

  2. INTRODUCTION • Business owners fundamentally need to know what their firm is worth. • This information is essential when intending to sell a firm, developing an exit strategy, transferring ownership to the owner's family, exploring new partnerships, merging with another company, or managing ESOPs. • These are just a handful of the reasons why a business should be valued.

  3. Business valuation is a combination of arithmetic, research, and, in certain cases, a very informed assumption! • A variety of methodologies may be employed to undertake business appraisal. This exercise should ideally be performed by qualified specialists, as professional judgement is required to: • Predict the financial performance of a corporation. • Consider the value of a company's own technology or specialized expertise. • Determine the likelihood of success in light of changing economic conditions.

  4. THE THREE PRIMARY APPROACHES TO BUSINESS VALUATION ARE AS FOLLOWS: • Asset-based method — The firm is valued using this technique by calculating the difference between assets and liabilities. • Income-based method — In this technique, the worth of the firm is evaluated to be equal to the current value of the predicted economic income. This method discounts or capitalizes projected gains at a rate of return that represents the risks and hazards of the investment. • Market-based method – The core premise of this technique is that the fair market value of a firm may be calculated using the prices paid by investors for stocks of similar, publicly traded (or private) companies.

  5. ADVANTAGES OF BUSINESS VALUATION 1] Knowledge of firm assets - The business owner obtains knowledge on the actual worth of the company's assets and is no longer required to rely on guesses. Business valuation assists in making judgments about insurance coverage, the amount of investment necessary, and so forth.

  6. 2] Resale value - Business valuation demonstrates the company's genuine market worth. If the owner intends to sell the firm, this procedure is required since it offers the owner bargaining leverage. 3] True company value - Business valuation incorporates not just simple data points such as stock market value or profit statistics, but also historical data as well as income and valuation growth projections. As a result, business valuation represents the company's genuine value. 4] Access to new investors - Business valuation can assist business owners in their search for new investors. To comprehend the company's future, potential investors would always demand on a business valuation study.

  7. CONCLUSION • Business valuation also aids in the development of long-term business strategy. Previous valuations might be utilized as benchmarks to help the firm strategize its growth ambitions. • Business valuation is a key procedure that assists a firm owner in understanding numerous components of a business, making it useful to the owner.

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