What is a business valuation for? Methods for estimating the value of an enterprise's business

Business valuation is the procedure for calculating the value of a company, business, or share thereof. Any manager with the help of business assessment can make the right decision on the sequence of development of his enterprise.

Business valuation is the determination of the non-market or market value of a business as an integral set of property. It is also an assessment of the right to profit. When evaluating a business, they determine the results of the company's activities, its efficiency, forecast income, analyze the market and the competitive environment.

Company or enterprise valuation

When evaluating the value of a business, many factors are taken into account. various organizations evaluate different indicators. For example, for industrial enterprise(plant, factory) evaluate the value of the property complex. For companies that are engaged in the service sector or trade, the priority is to evaluate their income.

Company valuation is necessary for:

• partial or complete sale of the company;
• in creating a business plan;
• company restructuring;
• conducting various operations with the assets of the enterprise;
• insurance operations;
• obtaining a loan for business development;
• revaluation by the company of assets in accounting;
• issue of assets;
• taxation;
• determining the creditworthiness of the company;
• determination of the rental fee when renting a business;
• relevant court decisions;
• acceptance of different management decisions.

The valuation of the enterprise's business is carried out in the following categories:

• minority and majority stakes in the company are evaluated. This task gives the most complete picture of the value of a large block of shares or a business as a whole;
• the property complex, the company's assets, as well as the financial flows of the enterprise are evaluated;
• the company's shares quoted on the market are evaluated.

Business Valuation Methods

There are 3 methods for assessing the value of a business: profitable, costly and comparative. When this analysis, choose the method that gives the most accurate estimate.

The cost method is used taking into account the costs incurred. The advantages of this method:

• based on existing assets;
• suitable for the valuation of enterprises, investment and holding firms that have just started their activities.

The cost method does not take into account the prospects for business development - this is its drawback.

The liquidation cost method, as well as the net asset method, are components of the cost approach.

The income method is carried out by calculating the present value of the expected profit. The underlying factor that is considered is income and profit. The higher the company's income, the higher its value.

This method is the most popular and common, based on future profits. With its help, the valuation of the business reflects the results of the company's vigorous activity.

The comparative method involves the analysis and comparison of the business being assessed with competitive enterprises that operate in the market. Information for this method is drawn from open stock markets, previous transactions with business assets, and the absorption market.

Business Benefits

For any enterprise, business valuation has the following advantages:

• you can increase the efficiency of company management;
• develop a good business plan;
• make an informed investment decision;
• easy to restructure the enterprise;
• obtain information about the market value of the company;
• buy back shares from shareholders;
• receive weighted taxation;
• determine the value of shares in capital, securities.

The factors that determine the market value are future and current profits, the cost of creating a company with assets, the ratio of supply and demand, the degree of business control, and others.

Business valuation process

The valuation of a business enterprise is carried out in the following way:

• analysis of the market where the company is active;
• collection of necessary information about the assessed object;
• calculation and agreement of results using business valuation methods;
• report and interpretation of results.

Company valuation - determination of the value of the evaluated block of shares. The package can be majority, minority, controlling and blocking, depending on the number of shares. Valuation is carried out for enterprises with any type of shares.

The liquidity indicator (the quality of securities, which characterizes the possibility of their sale) affects the value of shares. The high value of a security depends on high liquidity.

Valuation of shares mainly determines their value, the ability to bring profit to the owner. Indicators such as net assets, dividends, capital market help to evaluate shares.

The market value of shares is a certain price at which the object of analysis and evaluation can be presented on the market with a large number of competitors.

Business valuation services are mainly provided by specialized companies offering their strategies in this matter. A wide range of services allows you to carry out many actions, thus, it is estimated:

• property value;
• intangible assets (licenses, trademarks, technical documentation);
• the value of securities;
• the cost of goods;
• the cost of equipment and machinery.

When evaluating, they determine the market value, as well as other types of value (investment, collateral, insurance).

When determining the value of a business, the appraiser calculates the value of the assets and liabilities of the enterprise. Assets include any movable and immovable objects, equipment, financial investments, machinery, goods, cash reserves, employee qualifications, intellectual property (brands, trademarks), business reputation. Liabilities are various debts and outstanding obligations of the enterprise.

In the assessment and analysis of the value of a business, several approaches are used, so the assessment is ultimately as accurate as possible.

Business valuation and its goals

Entrepreneurial activity, based on the production of products and services, is reduced to obtaining the maximum possible profit in constantly changing market conditions. In addition to creating economic benefits, enterprises can provide services for marketing, storage and their sale to the final consumer.

The real sector of the economy, which is formed from enterprises of various industries, is the basis for the stability of the national economic system. Business links the state and the population. At the same time, it provides large cash receipts to the budget, as well as meets the needs of society in certain products and services.

The object itself economic activity may be subject to transactions. Even for its own owner, an enterprise is primarily a means of investing, with a subsequent return.

An entrepreneur may face various tasks that require him to know the real value of his own company. Among them are:

• preparation for the sale of the enterprise, in case of its bankruptcy;
• pricing for the issue of securities;
• collection of data for the calculation of insurance premiums and payments;
• business lending;
• non-monetary settlements with other companies;
• making managerial decisions based on mathematical and statistical calculations;
• determination of the strategic and tactical activities of the object.

Modern market conditions require the entrepreneur to make informed decisions. Conducting a business assessment allows you to identify and eliminate weaknesses in the activities of the enterprise. In addition, appraisal activity covers not only accounting data, but also determines the influence of market factors on the object, thereby calculating accurate final results.

Business Valuation Methods

For business valuation, an outside expert or company is usually hired to ensure independence of opinion and the absence of bias in the work being done. There are several fundamental approaches to calculating the value of a company. Let's consider each of them:

1. If the company has gone bankrupt, is at the stage of liquidation, or its profitability is negative, the cost method of calculation is used. It is based on determining the value of all assets and liabilities of the enterprise, and the value is calculated as the difference between them. Data on fixed and circulating assets, the cost of marketable products according to accounting data or at the average market value are evaluated. The calculation includes long-term investments and contributions to bills of exchange.
2. The method based on the calculation of the amount of income and benefits brought by the object is called profitable. It is based on two approaches, when capitalization is calculated, or the cost of cash flows, taking into account their discounting. The assessment considers the financial condition of the enterprise at the current moment, as well as the value of its property complex. As a rule, the essence of the method is to make a forecast of income for future periods. It allows you to determine the current state of the enterprise and its development trends.
3. The comparative method is based on comparing the company's value with similar enterprises on the market, taking into account their property. In practice, it is quite difficult to obtain accurate data, as market information about competitors may be unavailable or distorted. In addition, competition forces entrepreneurs to act outside the box, which in turn shapes the specifics of each business. Comparison in this case becomes ineffective.

Remark 1

All of these methods have their weak and strengths. Often the assessment is carried out using complex analysis economic activity of the object, including several methods at once.

Business Valuation Formulas

After the appraiser completes the collection of information about the object under study and determines the choice of assessment methods, he proceeds to mathematical calculations. To determine the value of the enterprise, depending on the methods chosen, different calculation formulas are used.

Factor analysis of an enterprise can be carried out according to the DuPont method, introduced into financial analysis by the company of the same name. The essence of the calculation is to determine the effectiveness of the enterprise in the market, that is, to determine its profitability, taking into account various factors. The profitability indicator allows you to determine the development trends of the company and calculate its future profitability. The beauty of this model lies in its simplicity. There are two-factor, three-factor and five-factor calculation models. The formula for the five-factor model is given below:

Figure 1. Five-factor model formula. Author24 - online exchange of student papers

where $TB$ is the tax rate, $IB$ is the interest rate, $ROS$ is the return on sales, $Koa$ is the turnover rate, $LR$ is the capitalization rate.

Remark 2

The disadvantage of the calculation is that accounting data is not always accurate.

Business growth trends can be determined by the formula:

$DC = DC_1 / (1 + r)_1 + DC_2 / (1+r)_2 + ... + DC_n / (1+r)_n$, where

$DC$ – cost of capital by years $i$.

$r = r (1 –T) L / (L + E) + dE / (L+E)$ , where

$r$ - loan rate, $T$ - income tax, $L$ - bank loans, $E$ - capital, $d$ - interest on dividends.

Then the trends in the cost of capital can be calculated using the formula:

$DC = (Pik – r) E$

where $Pik$ is the return on capital.

One of important indicators calculation is the goodwill of the business. This value is important for the sphere of trade and services. It shows how much the value of the entire business exceeds the value of tangible assets.

Goodwill = Valuation of a business for sale – Valuation of a business not for sale

That is, it is determined by the price that the buyer is willing to pay in excess of the value of his assets according to market data.

If the capitalization method is used, then the calculation is made according to the formula:

Cost = Profit / Capitalization Ratio

If a multiplier or value factor is used, obtained by comparison with similar companies, then the value will be calculated as:

Cost = Profit $\cdot$ Multiplier

Multiplier = 1 / Capitalization rate

In practice, the Gordon model is often used to calculate the value of a company and its investment attractiveness. The essence of the formula is to predict the discounting of cash flows in the long-term growth period:

$FV = CF(n + 1) / (DR - t)$, where

$FV$ is the value of the enterprise in the future period, $CF(n + 1)$ is cash flow at the beginning of the billing period, $DR$ - discount factor, $T$ - long-term income growth trends

Remark 3

However, such a formula can only be applied in conditions of stability of the country's economy.

What methods (methods) are used to assess the value of a business? How is business valuation carried out by example and what are the goals for this? What documents are needed to assess the business of an enterprise?

Hello everyone who visited our resource! In touch Denis Kuderin is an expert and one of the authors of the popular HeatherBober magazine.

In today's publication, we will talk about what a business valuation is and why it is needed. The material will be of interest to present and future entrepreneurs, directors and managers of commercial companies and all those who are close to business and financial topics.

Those who read the article to the end will receive a guaranteed bonus - an overview of the best Russian companies specializing in business valuation, plus advice on choosing a reliable and competent appraiser.

1. What is a business valuation and when is it needed?

Any business - whether it is a plastic cup manufacturing company or an automotive complex - strives to develop and expand its sphere of influence. However, it is impossible to correctly assess your prospects without a comprehensive analysis of the current state of affairs.

It is business valuation that gives owners and managers of existing commercial enterprises a real picture of the company's assets and its potential.

When does a business need an appraisal?

• sale of the entire enterprise or its shares in the form of shares;
• rent of an operating business;
• development of new investment directions in order to expand and develop the company;
• revaluation of funds;
• reorganization of the company - merger, separation of individual objects into independent structures;
• liquidation of the company as a result of bankruptcy or termination of activities;
• issue or sale of shares;
• optimization of production and business activities;
• changing the format of the company;
• leadership change;
• transfer of assets as collateral;
• transfer of shares of the enterprise to the authorized capital of a large holding;
• company insurance.

As you can see, situations in which a business needs professional assessment, a bunch of. But the main objective there is always one such procedure - a competent analysis financial efficiency businesses as a means of making a profit.

When initiating business valuation activities, stakeholders want to know what revenues a particular business entity is or will be generating in the future. Sometimes the task of the assessment is even more specific - to answer the questions: develop or sell the company, liquidate it or try to reorganize, whether to attract new investors?

The value of a business is an indicator of its success and efficiency. The market value of a company is made up of its assets and liabilities, the value of its personnel, competitive advantage, profitability indicators for the entire period of existence or a specific time period.

Small business owners and individual entrepreneurs the question may arise - is it possible to evaluate the enterprise independently? Alas, the answer is no. Business is a complex and multifaceted category. You can get a rough estimate, but it is unlikely to be objective.

And one more important nuance - independently obtained data do not have an official status. They cannot be considered as full-fledged arguments and will not be accepted, for example, in court or as.

2. What are the goals of business valuation - 5 main goals

So, let's consider the main tasks that are solved during the business valuation procedure.

Goal 1. Improving the efficiency of enterprise management

Efficient and competent enterprise management is an indispensable condition for success. The financial status of the company is characterized by indicators of stability, profitability and stability.

Such an assessment is needed mainly for internal use. The procedure identifies excess assets that slow down production and undervalued industries that can bring profit in the future. It is clear that the first must be disposed of, the second - to develop.

Example

During the business valuation in trading company it turned out that the use of rented warehouses for storing products is 20-25% cheaper than maintaining and maintaining their own premises, which are on the balance sheet.

The company decides to sell its warehouses and continue to use only leased space. There are cost savings and optimization of production processes.

Goal 2. Purchase and sale of shares in the stock market

The management of the company decides to sell its shares on the stock market. To make an economically viable decision, you need to evaluate the property and correctly calculate the share that is invested in securities.

Selling shares is the main way to sell a business. You can sell the company as a whole or in parts. Obviously, the cost of a controlling stake will always be higher than the price of individual shares.

At the same time, valuation is important for both stockholders and buyers. It is also desirable that the appraiser not only name the market price of the package, but also analyze the prospects for the development of the business as a whole.

Goal 3. Making an investment decision

Such an assessment is carried out at the request of a specific investor who wants to invest in operating enterprise. Investment value is the potential ability of invested funds to generate income.

The appraiser finds out the most objective market value of the project from the point of view of the investment perspective. Take into account, for example, the prospects for the development of the industry in a particular region, the direction of financial flows in this area, the general economic situation in the country.

More information - in the article "".

Goal 4. Enterprise restructuring

The main goal of the owner ordering an appraisal during the restructuring of the company is to choose the most optimal approach to the processes of changing the structure of the company.

Restructuring is usually carried out in order to improve business efficiency. There are several types of restructuring - merging, accession, separation of independent elements. Evaluation helps to carry out these procedures with minimal financial costs.

With the complete liquidation of the object, the assessment is needed mainly for making decisions on the return of debts and the sale of property at free auction.

In the process of restructuring, it is often required to carry out, the current assets and liabilities of the company, complete.

Goal 5. Development of an enterprise development plan

Development strategy development is impossible without assessing the current status of the company. Knowing the real value of assets, the level of profitability and current balance, you will rely on objective information when drawing up a business plan.

In the table, the assessment objectives and features are presented in a visual form:

№	Objectives of the evaluation	Peculiarities
1	Improving management efficiency	Results apply for internal use
2	Purchase and sale of shares	Valuation is important for both sellers and buyers
3	Making an investment decision	The object is evaluated in terms of investment attractiveness
4	Business restructuring	Evaluation allows you to change the structure, taking into account maximum efficiency
5	Development plan development	Evaluation allows you to draw up a competent business plan

Method 3. Estimated by industry peers

It uses data on the purchase or sale of enterprises close in profile and volume of production. The method is logical and understandable, but you need to take into account the specifics of the company being valued and specific economic realities.

The main advantage of this method is that the appraiser focuses on actual data, not abstractions, and takes into account the objective situation on the sales market.

There are also disadvantages - the comparative approach does not always affect the prospects for business development and uses average indicators of industry peers.

Method 4. Estimated cash flow forecast

The assessment is carried out taking into account the long-term prospects of the company. Specialists need to find out what profit a particular business will bring in the future, whether investments in the enterprise are profitable, when the investments will pay off, in what directions the funds will move.

4. How to assess the value of the business of an enterprise - a step-by-step instruction for beginners

So, we have already found out that only professionals can competently evaluate a business. Now consider the specific steps that business owners need to take.

Step 1. Choosing an appraisal company

The choice of an appraiser is a responsible and important stage of the procedure. The final result depends entirely on it.

Professionals are distinguished by the following features:

• solid experience in the market;
• use of up-to-date technologies and methods, modern software;
• availability of a functional and convenient Internet resource;
• a list of well-known partners who have already used the services of the company.

The assessors themselves must have permits and professional liability insurance.

Step 2 We provide the necessary documentation

In the appraisal firm, of course, they will explain in detail what documents you need to provide, but if you collect the package in advance, this will save time and immediately set the appraiser on a business wave.

Clients will need:

• title documents of the company;
• company charter;
• registration certificate;
• a list of real estate, property, securities;
• accounting and tax reports;
• list of subsidiaries, if any;
• certificates of debt on loans (if there are debts).

The package is supplemented depending on the goals and features of the procedure.

Step 3 We coordinate the business valuation model with the contractor

Usually the customer knows for what purpose he conducts the assessment, but is not always aware of which methodology is best to apply. During the preliminary conversation, the expert and the client work together to develop an action plan, determine the methods of evaluation and agree on the timing of its implementation.

Step 4 We are waiting for the results of industry market research by experts

To begin with, appraisers need to analyze the situation in the industry segment of the market, find out current prices, trends and development prospects for the area under study.

Step 5 We follow the business risk analysis

Risk analysis is a necessary stage of business assessment. The information obtained in the course of such an analysis is necessarily used in the preparation of the report.

Step 6 We control the determination of the development potential of the enterprise

Professional appraisers always take into account the prospects for business development, but it is desirable for clients to control this stage of the study and be aware of the results. It is always useful to know what potential your enterprise has.

Step 7 We receive a report on the work done

The final stage of the procedure is the preparation of the final report. Ready document is divided into separate positions and contains not only bare figures, but also analytical conclusions. The report, certified by signatures and seals, has official force in resolving property disputes and in litigation.

How to conduct an assessment as competently and safely as possible for your company? The best option is to involve independent lawyers as consultants at all stages. This can be done by using the services of the site Lawyer. The specialists of this portal work in remote mode and are available 24/7.

Most of the consultations on the site are free. However, if you need more in-depth assistance, the services are paid, but the amount of the fee is set by the customer.

5. Professional assistance in business valuation - an overview of the TOP-3 valuation companies

No time, desire or opportunity to look for an appraiser yourself? Don't worry, take advantage of our expert review. The top three Russian appraisers include the most reliable, competent and trusted companies. Read, compare, choose.

It does not matter for what purpose you are conducting an assessment - purchase and sale, secured lending, management improvement, reorganization - KSP Group specialists will carry out the procedure professionally, promptly and in accordance with all the rules.

The company has been operating on the market for more than 20 years, has about 1000 regular customers, and is well versed in realities. Russian business provides free consultations to clients. Among the permanent partners of the company famous companies, small and medium enterprises.

The organization is a member of Self-regulatory organization ROO (Russian Society of Appraisers) and liability insurance for 5 million rubles.

The company was founded in 2002. The company guarantees prompt work (the term for business assessment is 5 days) and offers adequate prices (40,000 for a standard assessment procedure). In its methods, the organization adheres to the principles of "Ethical Business" - transparency, honesty, openness, compliance with the terms of the contract, responsibility.

Yurdis employs 20 professional appraisers, members of the largest Russian SROs. Each of the specialists has liability insurance in the amount of 10 million rubles, diplomas and certificates confirming high qualifications. Among the well-known clients of the company are Gazprombank, Sberbank, Svyazbank, Center for Organization of Military Mortgage.

3) Atlant Grade

The company has been doing business in the appraisal market since 2001. Works with tangible and intangible assets, develops and predicts ideal schemes for increasing income, cooperates with enterprises in all regions of the Russian Federation.

The list of advantages includes the reference accuracy of estimates, competent legal execution of reports, a clear understanding of the goals and objectives of customers. The firm is accredited by commercial and state banks of the Russian Federation, uses an extended methodological base in its work, and applies its own technological and scientific developments.

And a few more tips on choosing a competent appraiser.

Reputable companies have a well-designed and flawlessly functioning website. Through the Internet resource of such companies, you can get free consultations, order services, talk with managers and representatives of the support service.

Conversely, one-day firms may not have a network portal at all, or it may be designed as a cheap one-page site. No additional information, analytical articles, interactive features.

Tip 2. Refuse to cooperate with broad-based companies

Organizations that position themselves as universal firms do not always have the appropriate level of competence.

Estimating the value of an enterprise's business is the job of determining how much a company is worth based on the profits made.

Financial business valuation can happen in two scenarios:

• conducting an assessment of the company, which is based on its property;
• valuation on a comprehensive basis based on existing assets and technologies, which should bring solid returns in the near future.

For the evaluation process, it is necessary that there be an object of evaluation and a subject who will conduct it.

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Subjects of evaluation- These are professional appraisers with the necessary experience. In conditions when there was no private ownership of real estate, there was no appraiser profession. The state, on the basis of its representatives, could itself determine the value of specific assets.

With the advent of private property, it became necessary to work with real estate professionals who could advise the buyer. If the transactions take place without the participation of a qualified appraiser, one of the parties may be deprived.

Object of assessment- a certain object of ownership, which is determined taking into account the rights that its owner acquires. Typical examples- organization, tangible and intangible assets.

• Evaluation of the effectiveness of the enterprise: 3 steps to success

Tasks of business valuation

• Increasing the efficiency of the company.
• Determining how much securities are worth on the stock market.
• Understanding how much the company is worth when selling as a whole or separately. This often requires an assessment of the value of the organization's business in order to sign an agreement to establish the share of owners for a possible event of termination under various circumstances.
• An appraisal may be necessary for the possible liquidation of the company, its absorption or separation into a separate structure.
• Creation of a plan for the development of the company. Strategic planning allows you to understand what future earnings may be, how stable the company will be in the future.
• Determination of the company's capabilities for loans, calculation of collateral in case of lending.
• Insurance taking into account the value of assets for probable risks.
• Making management decisions that are justified. When inflation occurs, the company's reporting is distorted. In this case, it is necessary to re-evaluate the company with the participation of independent appraisers.
• Work with investment project for the development of the company. In this case, you need to know the initial value of the value of the organization, as well as assets and capital in quantitative terms.

If the same object is evaluated at the same time from different positions, then its value may differ to a certain extent, because it will be determined by different methods and using different tools.

What principles of business valuation must be observed

There are several principles on how to value a company. With their help, you can create a basis for assessing any objects. Each assessment principle covers one of three groups :

• owner ideas;
• assessment features;
• market influence.

Depending on the interests of the owner, the following principles can be used when assessing the value of a business:

• The principle of utility- says that the benefits of any object have a different meaning. The principle is necessary when carrying out work to determine the value of the company. If the object turns out to be unnecessary and useless, then its value has a negative value.
• substitution principle- indicates the comparability of prices for the same objects. Allows for comparisons and analogies. Does not apply to unique objects.
• Waiting principle- valuation of the business, based on the fact that the value of the object will be exactly the same as the expected income. This principle is of great importance for the income approach.

The second group includes such principles for assessing the value of a business, which take into account the features of a particular object:

• Contribution principle- the value of an object on the market increases when a new factor appears that can affect income. As a result, the amount adequate to the market value should not exceed the value of the additional factor.
• The principle of added productivity- this type of productivity is usually defined as net income, attributable to land, it is important to take into account the issuance of costs of a compensatory nature. The owner has the opportunity to receive other income if his property is located in a favorable location.
• The principle of maximum possible performance- if any changes production factor may increase or decrease its value. If you need to add a resource, then at first there is an increase in price, then there is a decrease in this value.
• The principle of balance- a certain type of property is combined with various factors of production.

The third group - principles suitable for evaluation and relevant to the market environment:

• Dependency Principle- business valuation for specific type property is dependent on the properties of the property. For example, the value of real estate depends on the area.
• Conformity principle- the value of the company increases when the property is expected to be used in accordance with market expectations.
• The principle of supply and demand- the price is determined in accordance with the supply factor. If the demand increases, then the cost increases. If the supply goes up, then the price goes down.
• The principle of competition- if profit increases, then the attractiveness of the market grows, which means that competitors appear.
• The principle of change- over time, the value of the company changes.
• The principle of application with a high degree of efficiency. Used when an appraisal is required for restructuring a company. If the organization must remain unchanged, then this principle is better not to apply.

Business Valuation Methods

There are three common methods for estimating the value of a business on a specific date. The choice between them must be made based on the characteristics of the organization.

1. Income approach to business valuation. The assessment is made on the basis of how much income can be received in case of successful operation of the enterprise. Various risks are taken into account. The method is popular primarily because most buyers are not interested in the building or equipment, but in those financial resources that the acquisition or investment in development can bring.

Future earnings can be reduced to present value in two ways:

• Direct capitalization method. To calculate the market value, the formula V=D/R is used, where D is the net income of the organization for the year, R is the capitalization ratio. Accordingly, it is necessary to predict income, so this method is suitable only for enterprises where there is financial stability.
• Method of discounting estimated cash flows of income. It is used on the grounds that the current profit is worth more than subsequent ones. The reasons for this are different: inflation, seasonal cash flows, etc. A discount rate is used to discount the future flow.

2. Cost approach to business valuation. Required if the company does not have stable income. Allows you to adjust the balance. First determined market price assets separately. The sum of obligations of the enterprise is subtracted from their sum. The two most commonly used methods for the cost approach to business valuation are:

• net asset method. The amount of liabilities is deducted from the market value. Balance sheet items are subject to adjustment.
• salvage value method. The amount that will be received as a result of the sale of assets separately from each other is calculated. The accompanying costs are taken into account: dismantling, payments, taxes and more.

3. Comparative approach to business valuation. Calculations are based on similar companies. Almost never used due to the fact that the information may be unreliable. Three methods are applied:

• Capital market method. Focus on stock market prices. For calculations, data from similar companies are used.
• Deal method. Doesn't look like the previous one. It differs only in that in this case, the study is subjected to the price of the controlling stake, and in the previous - each share.
• Method of branch coefficients. Long-term follow-up is underway. Formulas are developed to value the organization's assets. Particular attention is paid to the conditions for the sale of enterprises, based on their production and financial indicators.

Expert opinion

Any estimation method has an error

Lev Leifer,

General Director of the Volga Center for Financial Consulting and Valuation, Nizhny Novgorod

Any method of estimation has a margin of error. as a result business valuation obtained using different methods will be different. Approximately, the error in the assessment can be up to 20-30%, and this value is completely normal. If the resulting difference is more than 50%, then the reasons may be contained both in the assessment methods and in the source information.

When determining assets, intangible assets, the value of which turns out to be very significant, may not be taken into account. Not so long ago, we had to determine the value of a company that worked in the field of nuclear energy. So, unaccounted for intellectual assets amounted to millions of dollars.

Another one possible error is an overpricing of fixed assets. Example: working with an agricultural company that previously ran a successful animal breeding business. The company has buildings for the construction of which had to spend impressive money. In appearance, these buildings are very attractive, they could be used, but they remained unclaimed due to the decline Agriculture. There are no other similar enterprises in the region. Warehouses, workshops and cowsheds stand unattended for a long time, the boiler house does not work, administrative premises are empty. If we approach the assessment formally, without taking into account the benefits of these assets, then their value will turn out to be overestimated.

With professional business valuation it is important to use the factor of economic depreciation. In addition, it is necessary to take into account the effect of reducing the value of the company when the situation changes. Such an operation leads to an increase in freedom in subjective evaluation. As a result, the results obtained are distorted. A forecast of possible trends may become erroneous if it is not supplemented by an analysis of technological possibilities organization and marketing research. Example - in the report, based on data on sales growth of 50%, a similar increase is expected in the next period of time. But the growth over the past period turned out to be associated with reaching the design capacity. There is no reason to keep the same pace. It is clear that the value of the company is artificially inflated.

• Performance indicators - the main sensors of the company

What types of value does business valuation include?

To understand the peculiarities of conducting a business valuation, it is necessary to clearly distinguish between the concepts: “cost”, “costs” and “price”.

Price is the amount that will be willing to pay for the property.

Expenses- the amount of costs that would be required in order to create a similar property. They may be higher or lower than the value, depending on various factors, such as the date of the valuation.

Price is the actual amount required to acquire similar items. Whether it exceeds the cost can only be said after analysis.

In view of the nuances, in practice, the following are distinguished types of value:

• Reasonable market value- unconstrained price formed on the principles of free competition. Applies if property rights have been transferred or alienated.
• Normally calculated cost- the amount that is calculated by the relevant authorities, based on the standards and instructions. An example is a taxable value.
• Average annual residual value of fixed assets, intangible assets, stocks and costs- calculated on the basis of account balances. For example, cost land plot, which is determined for the calculation of the corresponding tax. Rates per square meter are used, adjustment is provided due to various factors.

Accounting highlights balance sheet(divided by initial And restorative) And residual price.

• Book value- property costs from the balance sheet of the enterprise.
• Initial cost- the value of the property until the time of operation, repair or modernization.
• replacement cost- cost including restoration work A: repair, modernization, etc.
• residual value- initial cost minus depreciation.

Based on how the assessment is made, cost of reproduction And replacement cost.

• cost of reproduction- the cost of an analogue of the property being valued at current rates.
• replacement cost- the cost of property, which is the functional equivalent of the property being valued.

There is also the value of the property complex that continues to function, And liquidation value.

• The cost of the property complex, continuing to function- this is the value of the object, which, after its acquisition, will continue to function in order to generate income.
• Liquidation value- the cost is less than acceptable, with which the owner has to agree.

The types of costs depend on the situation. Allocate: investment, consumer, insurance, recycling.

• Investment cost- the value of the property, if it is to be used as an investment contribution.
• Use value- the cost calculated on the basis of the benefits that the object of purchase will provide to a potential consumer.
• Insurance value- the value of the object, which is indicated in the insurance contract.
• Recycling cost- the cost of materials that will be obtained as a result of the disposal of the property.

Business Valuation Factors to Consider

If you need to determine how much an organization costs, then you need to take into account a large number of factors related to its price. Plus, each factor should be considered separately.

At business valuation it is necessary to take into account the factors of macro- and microeconomics. These include the following:

1. Demand

Demand is usually considered on the basis of consumer preferences, which are judged on the basis of business income. The time of its maintenance and possible risks are also taken into account.

2. Benefits of a business for the owner

A business is valuable when it brings some benefit to the owner. Its presence is determined on an individual basis. Business utility is usually understood as the ability to be profitable in a certain place for a long period of time. An increase in utility leads to an increase in market value.

3. Income (profit)

The income that can be received by the owner is associated with the possibility of making a profit as a result of the sale of the object. It is the difference between income and expenses.

4. Time

When assessing the value of a business, the time factor is of great importance. It happens that the new owner begins to make a profit soon after the acquisition of the company. But it also happens that you need to spend money now, and the profit is made later.

5. Restrictions for the business in question

Restrictions on business are possible in several cases - for example, when restrictive measures are introduced by the state. As a result, the business will cost less than if there were no restrictions.

6. Risk

The cost depends on possible risk and whether the organization will generate income in the near future.

7. Control

The degree of control for the owner, this factor can affect the value of the object.

8. Liquidity

The degree of liquidity is a fairly significant factor in assessing the value of a business. The market is able to pay funds for those assets that can be quickly converted into cash with minimal risk and costs.

9. Degree competition in this industry

This indicator must be taken into account if the value of the company is determined. Today, most Russian companies make quick profits due to their most advantageous position in the market. However, in the event of increased competition, their income will seriously decrease.

10. The ratio of supply and demand

The demand for an organization depends, among other things, on the solvency of investors, what value in terms of money, what opportunities to raise additional funds exist. The demand for a business and its value largely depend on other sources of attraction Money. Factors of no less importance social order- the proximity of business to citizens, the stability of the political situation.

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Expert opinion

Don't Forget to Consider the Multiplier

Alexey Gerasimenko,

partner of ADE Professional Solutions, Moscow

Amount by business valuation largely depends on the profit received and on the multiplier - such a coefficient by which the funds received must be reduced in order to assess the organization.

Example. The investor has an intention to buy an organization with an indicator of "7 years of average profit", which is estimated at 100 million rubles. The value of the indicator is 7, which means that the entire business can be valued at 7 times more expensive. The indicator is determined for each organization. If the company's shares are listed on the stock exchange, then the multiplier can be determined independently. To do this, you need to multiply the value of shares in the market by the result. Main indicator financial plan is EBITDA - earnings before depreciation and taxes. The value of the company in the market is determined by the formula: EBITDA x indicator.

It is imperative to take into account that any company can have debts. If you want to understand how much an organization's shares are worth, you need to subtract the amount of all debts from the company's market valuation. To increase the value of a business, you need to use two main methods: increase the financial result or achieve an increase in the multiplier.

Increase financial result- the main task in the work of management. To achieve this, it is necessary to achieve business growth through various operations and increase its efficiency through modernization and implementation. modern ways production.

Business valuation calculation: key indicators

Discounted cash flows will allow assessing the value of the business in the forecast period, and discount rate help bring future income to present value. In general, to calculate the value of a business for a certain period, it is formula:

P = CFt/(1+I)^t, where:

I - discount rate;

CFt - cash flow;

t is the number of the period for which the assessment is carried out.

It must be emphasized that the post-forecast period is not the end yet, and the organization will not disappear anywhere, which means that it will carry out its activities. But what are the prospects is difficult to say.

However, in a favorable situation, it is possible to apply formula:

P = СF (t+1)/(I-g), where:

CF (t+1) - cash flow for the first year of the post-forecast period;

g is the growth rate of the financial flow;

I - discount rate.

This model should be used if:

• large market capacity;
• stable supply of raw materials;
• free access to finance;
• favorable market environment.

If the bankruptcy of the enterprise and the further sale of property are expected, to calculate the value of the business, one should apply formula:

P \u003d (1-Lav) x (A-O) - P liquid, where:

P liquid - expenses for the liquidation of the enterprise;

L cf - discount for urgent liquidation;

O - the amount of obligations;

A - the value of the company's assets, taking into account the revaluation.

Expenses, among other things, consist of expenses for:

• insurance and taxation;
• control;
• staff payments;
• payment for business valuation services.

Liquidation value depends on where the company is located, how large its assets are, what is the atmosphere in the market and other factors.

What stages of business valuation should any manager go through?

In the moment business valuations three basic steps need to be identified:

• Preparatory stage.
• Evaluation stage.

• The final stage.

For these stages, the value of the business is estimated in the following order:

Step 1. Choice of standard and methods for evaluation.

The first stage of work is the determination of a specific cost in accordance with the current standards for the cost of a case. After the standards business valuation have been determined, it is necessary to choose the methods to work with that are valid for a particular case.

Step 2 Preparation of information for the purpose of evaluation.

After choosing methods for evaluation, you need to use the data necessary for work. Information can be taken from the following sources:

• organization for work;
• stock market;
• statistical data;
• marketing analysis.

According to the standard, this information may cover:

• Properties of the company, the share of shareholders in the total volume of securities to be assessed, the characteristics of the quantitative series, various privileges and obligations, factors that can affect the agreement.
• Characteristics of the company and stages of its development.
• Financial data regarding the company.
• Company obligations.
• Industry metrics that are important to the organization.
• Factors of the economic plan, important for the company.
• Market conditions for finding information. An example is data on rates of return on alternative investments, data on mergers and company reorganizations.
• Information about various transactions with the name of the company, and what are the shares in the total block of shares.
• Other data that is relevant to the assessment.

When assessing the value of a business, it is necessary to apply financial statements for a specific time, taking into account current indicators.

There may be discrepancies in the indicators due to distortions caused by any factors.

Typical examples:

• changing the standards for accounting information;
• change in the properties of funds;
• currency fluctuations;
• structural changes prices.

In such cases, a certain standard should be introduced, which will be used in these calculations. An adjustment process will follow, which often includes:

• Bringing data about the company and its analogues to a common denominator.
• Recalculation of the former value into the current one.
• Adjustment of income items so as to obtain the most important results of the company's activities over a long period of time.
• Accounting for non-functional assets that are related to the expenditure side.

Casting financial reporting to a single basis.

If we talk about the state accounting system, then the organization always has the freedom to determine the methods for its maintenance. This choice should be confirmed for one year and may be changed thereafter.

applied financial statements should also be brought to a single form. Russian laws do not contain standards for the creation of such documentation. The best way out is to bring the reports to the IAS/GAAP/FRS standard.

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Adjustment of information used for inflation

Business valuation should be done using verified indicators. If there is a significant price fluctuation, an adjustment is necessary.

Financial management includes two options for changing indicators:

• changes in assets depending on the state of inflation;
• taking into account the impact of inflation using deflationary indicators.

Differences in obtaining the final results for each of the approaches have little change in those countries where there is an established market and the inflation rate is minimal.

The valuation of a business in the Russian Federation is best done using direct adjustment methods for certain amounts based on inflation indicators.

Inflation indicators, depending on the field of activity of the company, can be:

• price index of the organization;
• consumer price index;
• possible devaluation of the price level;
• price index calculated for a specific organization.

Step 3 Assessment of financial affairs in the organization.

To conduct a business valuation, you need to do a preliminary check to obtain important information about a particular company.

To assess the position of the organization in terms of finance, you need to choose a model that allows you to:

• Take into account the adjustment model for indicators on the impact on inflation.
• Display the financial situation of the organization during the assessment.
• Understand how the position of the organization corresponds to the level of its economic security.
• Determine possible surplus on working capital.

The methodology for assessing the financial position of an organization may include one of three approaches:

• First approach relates to differentiated accounting for different debt obligations, taking into account maturities. The intensity of cash injections is determined. Their sufficiency for a specific time is checked. This approach takes into account the use of primary flow data.
• Second approach uses the liquidity balance. This allows you to determine financial position organization and calculate the surplus at a specific point in time.
• Third Approach is based on the use of indicators obtained by comparing sources available at a particular point in time.

The use of each of the options in practice is relevant to the definition critical level. It allows you to determine the financial position of the company by its solvency. Most often, the result is a correct understanding of the financial affairs of the organization. This information can apply information to evaluate the company.

Step 4 Organization risk assessment.

In practice, the method of increased discount rate is most often used. This is how it is defined additional income able to exceed the current rate without risk. In this case, the CARM / ART models are usually used.

Step 5 Carrying out the required calculations, which are correlated with the selected methods for evaluating the company's performance.

Step 6 Cost adjustment.

Whatever action is required to be taken: trying to make a forecast or checking data from past seasons, the valuation of the business is made using several of the most important variables. They may have different meanings for a given situation. Often, however, a cost estimate is based on several variables:

• the size of a particular share;
• voting rights;
• the amount of the company's profit;
• provisions related to ownership;
• special conditions;
• the financial position of a particular company.

It is also important to take into account that in the end the sum of all shares often differs from the value of the company as a whole, since its rights and its interests differ from the interests of individual divisions.

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Adjustment of company value for financial position

Basic internal factor to be taken into account is financial assessment companies. This is a defining indicator, because if a company is in danger of bankruptcy, then the assessment is different from that of a solvent business.

Excess working capital

To take into account the state of the enterprise at the time of assessment, it is important to take into account the presence of a surplus or deficit for current assets.

The presence of a surplus or shortage of funds is determined by comparing the necessary working capital and those funds that are available.

If, as a result of the analysis, a surplus was determined for working capital, it must be added to the actual value of the company, because this value indicates unclaimed assets with high liquidity.

If a working capital deficit has been determined, it should be deducted from the total value of the company, since this value is those financial resources what the investor should bring to the organization for the purpose of its qualitative functioning.

Adjustment of the price of the company for a certain share. Control amount

The cost of control to the management of the organization. If the impact of such control is being evaluated, it is important to determine the presence of a variety of control elements for a particular situation and understand how they affect the cost of the procedure.

Here are the most significant rights related to the ability to control:

• the right to appoint management and approve directors;
• the right to various kinds of privileges for employees;
• the right to a specific policy and change the actions of the organization;
• the right to liquidate assets, as well as to acquire them;
• the right to select people to conduct joint business and business communication;
• the right to decide on the acquisition process of other companies;
• the right to sell, recapitalize and close the company;
• the right to acquire their assets for the organization or their sale;
• the right to register shares of the company;
• the right to pay dividends;
• the right to change existing statutory documents.

Based on the above list, it can be understood that the person who has a controlling stake in the company has a number of important rights that a shareholder does not have. All such cases must be considered separately. If almost all elements of control are absent, then a decrease in the estimated value of the company is possible. If a minority stake does not consider any one element, then it is important to take it into account when forming an assessment.

There are three main approaches to accounting for the cost of a package without control:

1. A proportional part of the assessment of the entire company, excluding discounts.

2. Comparison with sales for non-controlled stakes.

3. Bottom-up approach. First you need to understand where the zero mark is, then the other elements are summed up at the cost of the non-controlling stake.

Adjustment of the value of the company for a specific share. Liquidity is the ability to sell a company in a short period of time. It allows you to significantly increase the value of your business. If there is no liquidity, the value of the company decreases compared to a business that is more profitable. In other words, the market pays the cost of liquidity and does everything to reduce the value of the company if there is no liquidity.

Typically, holdings in closed companies do not have any weight in the market of open companies with high liquidity. At the same time, the share of such an organization turns out to be less in comparison with the parameters of open organizations. Relative liquidity for different packages depends on a number of factors. The share of the company turns out to be a very important factor.

In most cases, selling a small share in a business is easier; in other companies, it is easier to sell a large share. Over time, if a business valuation is carried out, the liquidity factor becomes significant.

If the package is illiquid, then this can be understood based on three ways:

• an increase in the discount rate to take into account the peculiarities associated with non-liquidity;
• discount for lack of liquidity;
• liquidity discount.

Key management personnel

The main qualitative characteristic for closed organizations is their dependence on one or more persons from the company's management. In some cases, this factor is of decisive importance, therefore, during the assessment, it must be adjusted separately.

• The authorized capital of the organization: size, accounting, analysis and audit

Low diversification of production

Most closed companies have a small range of products. Such a policy increases the risks for them and narrows the development opportunities, because the insignificant breadth of the assortment is an obstacle to the growth of consumers.

Other factors

Other factors that need to be taken into account for different industries depend on the intensity of the business and the development efforts of the company. Other indicators taken into account are the scale of work, the position of the company in the industry, its comparison with other organizations.

Step 7 Preparation of a business valuation report.

Writing a report with a purpose business valuation carried out according to the BVS-VIII standard.

The report should do the following:

• state the analysis and conclusion as clearly and understandably as possible;
• provide details of the assessment as background information.

Most often, the following sections can be seen in the report:

1. Introduction.

2. Macroeconomic information.

3. Industry information.

4. Description of the organization.

5. Description of data sources.

6. Financial analysis for the company.

7. Assessment of the state of the organization and conclusion.

Estimating the value of a business on the example of a company

As an example, consider the situation of the Arbeiten company, which manufactures toasters and carries out exclusively wholesale their equipment to other firms. The main advantage of Arbeiten is quality, while competitors use lower prices.

To compete with competitors, the company seeks to carry out large-scale production, saving on costs.

Stage 1. Determination of cost factors

In order to assess the value of the company, the following factors of its value were identified:

• The rate of increase in sales.
• The ratio of cost and sales.
• Ratio of administrative and selling expenses to sales.
• The effective tax rate on the company's income.
• Interest rate.
• The ratio of indicators of finished products and stocks with sales.
• Ratio of raw materials and materials with sales.
• Ratio accounts receivable with sales.
• Ratio of accounts payable to sales.
• The ratio of short-term loans to sales.
• The ratio of depreciation to fixed assets.
• Ratio of net capital investment to sales growth.

In order to obtain an objective model, data from financial statements for the period from 1999 to 2002 were used.

It was supposed to predict the period from 2003 to 2010. Further calculations were considered excessive, since at that time a decrease in demand for toasters was expected.

Stage 2. Formulation of assumptions

To make the forecast, the experts formulated a number of assumptions:

• The sales growth rate will fall from the initial 25% to 2% per year.
• To maintain profit margins, the company would need to match toaster prices with those of competitors, which would move cost from 80% to 84%.
• Working capital items will retain their ratio.
• The effective income tax rate will reach 15%, and the interest rate on loans will fall to 14%.
• Management expenses will amount to approximately 6% of sales.
• Indicators such as the level of capital investment, depreciation and short-term borrowing will not change.

Stage 3. Cash flow calculation

In 2004, some indicators were calculated as follows:

• P (2004) = P (2003) × (1 + TRP (2004)) = 500 × (1 + 20%) = 600 million rubles.
• S (2004) = P (2004) × S / P (2004) = 600 × 81% = 486 million rubles.
• A (2004) = VA (2004) × A / OS (2004) = 158 × 9% = 14.2 million rubles.
• NP (2004) = EBIT (2004) × ENP (2004) = 61 × 9% = 5.49 million rubles.
• OA (2004) = (GP / P (2004) + SM / P (2004) + DZ / P (2004)) × Implementation (2004) + DS (2004) = (7.5% + 9.4% + 5%) x 600 + 3 = 134.4 million rubles.
• O (2004) \u003d (KZ / P (2004) + KrZ / P (2004)) x P + DolZ (2004) \u003d (5% + 6%) × 600 + 0 \u003d 66 million rubles.

Data on all the necessary parameters for the forecast period will make it possible to calculate the amount of cash flow:

FCF (2004) = 61 × (1 - 0.09) - [(246 - 223 + 5) - 14] - [(44 - 38) + (56 - 47) + (30 - 25) - (30 - 28)] = 13.5 million rubles.

Thus, it is possible to obtain a basic estimate of the value of the cash flows of this organization for the period from 2003 to 2010 - 270.1 million rubles. This figure is indicative as it does not take into account the value of cash flows in the post-forecast period.

Company Information

ADE Professional Solutions. Field of activity: consulting services in the field of enterprise finance (preparation of financial statements in accordance with IFRS, financial and tax expertise, preparation for an IPO, management consulting). Form of organization: LLC. Location: Moscow. Number of personnel: 20. Annual turnover: 50 million rubles. (in 2010 year). Key clients: AvtoVAZ, Atomredmetzoloto, Integra, Lunch, Mazda Motor Rus, Miel, OGK-2, RusHydro, Rusjam, Yamal LNG, Trivon Group, Vimetco, Storm Capital Management fund.

Privolzhsky Center for Financial Consulting and Valuation provides business valuation and company value management services. Winner of the "National Recognition-2004" contest in the nomination "Best Appraisal Company". Among the customers are enterprises of the LUKOIL group, OAO GAZ, the Krasnoye Sormovo plant, Nizhny Novgorod machine building plant, Nizhny Novgorod International Airport.

At the present stage of development of the business market and the world economy, the valuation of intangible assets and intellectual property has become no less important than tangible ones. The role of objective analysis and accurate determination of business value has increased. This procedure is simply necessary for those who are planning to invest, buy or sell enterprises. Independent evaluation the value of the company in such situations becomes important tool management that will enable right choice, avoid many risks and get maximum profit. It will not even be able to fully function and expand without qualitative assessment at one stage of development.

What is a business valuation?

Business valuation is a procedure for determining the market value of an enterprise (taking into account tangible, intangible assets, financial condition, expected profit) conducted by authorities or experts. Any property in conjunction with a package of rights to it can become the object of assessment. The meaning of the term "business valuation" is slightly different. It implies the definition in monetary terms of the value of the enterprise, which includes (apart from assets) its utility and the costs incurred to obtain it.

The main purpose of the appraisal is to establish for the client the value of the market value of the assets being appraised. The customer initiates a business valuation, as a rule, in the event of a sale or purchase of a company, equity interest, lending, project financing, improving the efficiency of enterprise management, etc. Often there are situations when several reasons are combined.

When do you need a business valuation?

An increase in the value of a business is one of the important indicators of the growth of its profitability, a decrease indicates the need for changes in the management system and development strategy. Both the owner of the enterprise and a third party may be interested in conducting an objective assessment.

The value of a business is determined by:

• assessment of management effectiveness;
• corporatization;
• reorganizations;
• use of mortgage lending;
• taxation upon inheritance, donation;
• participation in the activities of the stock market;
• assessment of allocated business shares in the event of a merger in the form of consolidation and expansion;
• partial or complete liquidation;
• issuance of new shares, etc.

A business valuation may be needed not only by a potential investor or owner of an enterprise, but also by other market participants, such as insurance companies (to determine the amount of risk, confirm compliance with a risk sharing agreement between the client and the insured), credit institutions(to assess solvency, determine the optimal amount of the maximum loan), as well as to government agencies, shareholders, suppliers, manufacturers, intermediaries. Final result assessments can be presented in one report in several sections or in two different documents. The assessment of the enterprise is carried out in accordance with the goal, which is formulated by the customer when drawing up the Contract and the Assignment for assessment. They must necessarily comply with the Federal Law "On valuation activities in Russian Federation”, the provisions of the “National Code of Ethics for Appraisers of the Russian Federation” and the Federal Appraisal Standards.

Business valuation methods

Before investing or acquiring a business, the buyer first of all evaluates its usefulness for himself. It must meet his individual income needs. It is the latter indicator, taking into account costs, that is the basis of the market value that the appraiser calculates. The principles, methods and approaches to its definition are chosen based on the specifics of a business as a “commodity”: investment (money is invested in it, expecting to make a profit in the future), consistency (it can be sold as a system or individual elements), need (depends on the situation inside the production and in external environment). The appraisal process consists of several stages performed by a specialist appraiser to objectively determine the value of a business:

• conclusion of an appraisal agreement with the customer;
• determination of the characteristics of the object of assessment;
• market analysis;
• selection of assessment methods, calculations;
• generalization of the results obtained within the framework of each of the approaches, determination of the final value of the value of the object;
• preparing and submitting a report to the client.

At the fourth stage, the appraiser chooses one or more optimal approaches to enterprise valuation that will be most effective in a particular situation. Business valuation methods are universal, but they are selected individually in each situation.

costly

This approach implies a set of methods for assessing the cost of an object, which are aimed at determining the costs necessary for the restoration, replacement of the enterprise, taking into account costs, equipment wear and other factors. It allows you to track absolute changes in the balance sheet with its possible adjustment to the date of assessment (according to an independent expert appraiser) - data on current market prices for labor, materials and other costs are used.

Profitable

The income approach means a set of methods for assessing the value of an object, which are based on determining the amount of expected income from a business. In this case, the key factor determining the value of the object is income. The larger it is, the higher its market value. Here, experts apply the estimated principle of expectation, taking into account the period of receipt of potential income according to the plan, the number and degree of risks. For the analysis, capitalization ratios are used, which are calculated based on market data. This valuation method is considered the most effective and convenient for determining the value of a business (only in some cases, comparative or costly ones turn out to be more accurate). The approach is better to use if the company's income is stable.

Comparative

The comparative method of determining the value of an enterprise means a set of valuation methods that are based on a comparison of the object of assessment with competing objects (with similar characteristics, availability of information on transaction prices). Experts believe that it is he who gives the most accurate results (of course, provided active work market of properties similar in parameters). For this approach, market data for similar objects and the method of the capital market, transactions and industry coefficients are used (with elements - comparative analysis by benchmarks).

Important: it is worth noting that each approach makes it possible to emphasize and objectively analyze certain characteristics of the object of assessment, but they are all interconnected.

How to evaluate the value of a business?

The assessment of business and other objects is carried out by specialized companies. In order to assess the value of the enterprise, it is necessary to contact specialists, clearly indicate the purpose of determining the value and sign the Agreement. According to Decree of the Government of the Russian Federation of December 2007 No. 60, the assessment process should take place in several stages:

1. Definition of the object (description, rights to it, date and basis of assessment, limiting conditions).
2. Conclusion of an appraisal contract (determination and preliminary inspection of the object, selection of the type, sources of the necessary data, recruitment of personnel, development of an appraisal plan, drawing up and concluding a contract, payment for services).
3. Determination of the characteristics of the object (collection and verification of data, determination of external and internal information).
4. Market analysis (includes analysis financial ratios, reports, adjustment of financial statements for evaluation purposes).
5. Selection of methods within a specific approach (or several), carrying out the necessary calculations.
6. Summarizing the results, determining the final cost of the object.
7. Compiling and submitting a report to the client.

Choosing an appraisal company

The appraisal company is the organizer of the appraisal project, assists the appraiser in its management professional activity provides marketing, financial and information support. It provides services not only to business owners, but also to legal entities, financial institutions(most often banks), insurance companies and government agencies. Valuation services are paid, as a rule, by the owner of the property, but often the second party puts forward certain requirements regarding the appraiser company. When choosing an appraisal company, it is necessary to collect as much objective information about it as possible and make sure of its competence and professionalism. Particular attention should be paid to the following factors:

• time on the market;
• customer reviews;
• business reputation;
• position in the ratings of independent specialized agencies and publications (but it is important to pay attention to the rating criteria, it should be formed from generalized indicators; you can use data, for example, from the banki.ru resource, which display the degree of customer satisfaction with the services of different banks, and see which appraisal companies they cooperate with);
• documents (Certificate of state registration legal entity, copies or scans constituent documents etc.);
• awards, certificates, diplomas;
• the amount of liability insurance (the higher it is, the safer it is for the customer).

The valuation company must prove itself as an organization that gives the right results and offers the services of objective experts, not motivated by a third party.

Submission of necessary papers

To start the assessment process, the business owner must provide a package of documents. Its position depends on the purpose of the event, the form of ownership and the criteria for the formation of the assessment. Many appraisal companies have launched websites where you can apply online or by phone (but you only need to submit documents in person). The basic package includes the following papers:

1. Registration Certificate or Articles of Association.
2. For joint-stock companies– reports on the results of the issue of securities, an extract from the register of shareholders.
3. Documents displaying organizational structure and activities of the facility.
4. Financial statements for the last 3-5 years, sometimes an additional explanation is needed for some balance sheet items.
5. Copies of patents, licenses.
6. If necessary, documents confirming the ownership of real estate.

Advice: it is important to consider that each appraisal company own work methodology. Sometimes, in addition to the basic set of documents, additional papers are required from the customer, for example, a development plan for the next few years, drawing up an investment project, an auditor’s report, explanatory note from the owner with a description of the company and an indication of the number of staff.

Appraisal model agreement

The dynamic economic situation in the country and the world makes it necessary to develop an individual model for each assessment. The study of the same object is rarely repeated, but in this case it is impossible to reproduce the same assessment. Appraisers use generally accepted models as a basis. Their choice must be agreed with the client based on the goals and objectives of the project. The optimal model should take into account not only the financial aspect, but also help in assessing the level corporate governance, have the potential and act as an independent method for assessing the value of a business.

Basic business valuation models:

1. Economic value added (EVA).
2. Market value added (MVA).
3. Added value equity(Shareholder value added - SVA).
4. Total shareholder return (TSR).
5. Added cash flow (Cash value added - CVA).

Getting a report with results

Business valuation - example

The business valuation report can be submitted both in text format and in the form of tables or with their active use. For example, consider the valuation of an enterprise using the net asset value method (cost approach). It is most often used if the company has significant tangible assets (or very few of them), a percentage of total costs in the cost of a product or service is negligible, in recent years the cash flow has been subject to significant fluctuations and if the company does not have fully depreciated assets that are currently generating income.

Consider an example based on a table:

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Business valuation is necessary not only for conducting purchase and sale transactions, calculating the collateral value, but also for other purposes, for example, to determine the effectiveness of management. In the course of performing the assigned task, the expert takes into account, in addition to the costs of creating an enterprise, market factors, which may affect the cost, and also uses technological, organizational and financial analyzes. Valuation activity is the most important part of any developed state, because the results of valuation become the basis for making important economic and managerial decisions in the private and public sectors.

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