Determining the economic value of a company is central to any acquisition transaction. The valuation serves as a basis for the acquisition price. We will minimize the risk of your paying too much or receiving too little.
There are many misconceptions about the value and valuation of companies. Many of these misconceptions are due to confusion between the economic value of a company and the accounting concepts of the value of a company.
The terms profit and cash flows also often give rise to confusion. In the case of valuation based on economic value, future cash flows are central. A cash flow is not the same as the profit of a company. Profit is an accounting concept. It is subject to accounting rules that change regularly and can be interpreted in different ways. Free cash flows are cash flows which can be withdrawn from the company without jeopardizing future business operations.
When determining the economic value a great deal of attention is also focused on the company’s risk profile. After all, one company will have much greater risk than another. In the valuation this is reflected in the return requirement. The more risk an investor incurs, the more return he wants to achieve.
When disputes arise in private life, such as divorce, they often affect the family business. For example, the shares need to be valued, and this may become a bone of contention. In situations involving a conflict or opposing interests, this can be a complex and time-consuming affair. Depending on the assignment, we can act as an advocate, neutral expert, binding advisor or mediator. We can also provide a second opinion on previous valuations.