Company valuation services are crucial for privately held small and medium-sized enterprises (SMEs) in critical stages like raising capital from private equity or strategic investors, making investment decisions for growth, as well as in cases of an exit strategy. It provides an objective assessment of the company’s present and potential future value for shareholders as well as potential investors.
The initial stage of company valuation involves market analysis, an examination of the competitive environment, and an analysis of the company’s marketing strategy. Realistic sales volume scenarios are determined based on the likely development of their market share. The appropriate valuation model is then selected based on the nature of the industry and revenue model.
Subsequently, a detailed analysis of the company’s current financial and operational structure is conducted. This includes an examination of its cost structure, operational expenses, financial obligations, personnel structure, strengths and weaknesses compared to industry peers, and areas for improvement. This analysis shapes the optimal revenue and expenditure model based on the information obtained.
The results of the analyses are aligned with the company management’s business strategy and shared with the top management of the company, contributing to the clarification of the strategic roadmap. In case capital investments are necessary, their feasibility analyses are required in order for their projections to be integrated into the existing business plan.
The well-studied business plan of the company forms the basis of the valuation study. Regardless of the method used for valuation, the study should include an analysis of both growth potential and possible environmental and financial risk factors. Such assumptions are clearly defined and quantified, and the valuation study is presented in the form of base, optimistic, and pessimistic scenarios depending on respective assumptions.
The purpose of the valuation study is to provide company management with a strategic direction, goal-setting, and a framework for both current and future company value. In this context, the company management gains the ability to conduct more informed and robust relationships with both its shareholders and potential private equity investors.