Business valuation comprises a number of factors with essential contributing components that collectively determine the value of a business. The projection and predictability of future cash flows and the assumptions driving these projections requires professional analysis and stress-testing.
Qualitatively, the effects of key issues such as client and supplier relationships, licencing and regulatory environmental effects are essential to project the potential to operate successfully as a profitable enterprise.
Quantitative analysis is performed on the historical performance of the business, to identify the key influencing factors that affect the value of a business enterprise.
The typical sources used for the analysis are the historical audited annual financial statements as well as the latest management accounts. Trends in performance are identified using various financial ratios analysis, with all irregular and exceptional movements traced and examined.
Performance is compared to the peer group average to validate all critical performance drivers, such as the level of gross and net profit margins to clarify the performance interpretation used in the underlying business valuation calculations.
Businesses can be complex creations, but the markets in which they operate can be far more complex. Very little ever goes according to plan, so ensuring that you and your business are prepared for all sorts of scenarios is critical.
Our experience in financial modelling, scenario projection and actuarial techniques enable us to form robust and communicable projections for a range of scenarios. Armed with knowledge supported by rigorous data analysis, businesses are far more equipped to decide what type of opportunities are worth pursuing as well as which risks need to be carefully managed.
A resilient business is one that is informed and prepared for whatever may come.
The ability to raise financing is reliant on the ability of the borrower to service the financing requirements. The risk associated with financing arrangements is typically mitigated using security mechanisms.
A strong understanding of the ability of a business to generate both cashflows and value is important in establishing the likelihood of a borrower meeting their obligations and of those security mechanisms functioning as expected.
The guidance of a credible business valuation report will assist to lighten the need for unnecessary security requirements, whilst the opposite will apply for financiers seeking to comprehensively cover their risk positions.
It is said that “Without counsel plans fail, but with many advisers they succeed”.
Our team has a wide range of experience across the financial services industry as well as a deep network of professionals in all corners of the market. Our strengths lie in looking through a business and determining not only how and why it works, but also the value that the components really generate.
These strengths can be effectively used to provide guidance in terms of business and strategy development, or in solving specific problems that your business may be facing. Get in touch to start a discussion about whether we may be able to assist you in achieving your objectives.