Business Valuation – Importance and Methodologies
Business Valuation is the process of determining what your business is worth. Determining your Business Valuation is an important prerequisite for intelligent decision making. Therefore, Business Valuation is the ‘Economic Worth’ of a Company which is arrived at using certain assumptions and limiting conditions and subject to the data available on the valuation date. Business Valuation is critical for strategic business decisions like: Fund Raising Mergers & Acquisitions Sale of Businesses Family/Shareholders Disputes Voluntary Value Assessment Regulatory/Accounting Compliance under RBI Act, Income Tax Act, Companies Act Approaches and Methodologies In business valuation, valuation is typically performed by one of three core Valuation approaches: Asset Approach The asset based method views the business as a set of assets and liabilities that are used as building blocks of a business. The difference in the value of these assets and liabilities on a book value basis,...