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How Accurate is Your Estimation?

By rosieseldon, June 07, 2017 | Business Consulting Education Information Legal

Accurately valuing your business is vital in empowering better business decisions and ensuring transparent and streamlined negotiations.

A company valuation is defined as an estimation of the worth of that business. Though the term ‘estimation’ is key to that statement, ensuring that a company’s valuation is accurate is pivotal in so many business transactions. Whether you are the business owner or an investor, any deal you undertake pertaining to a company’s valuation must be fair to both parties and ultimately result in a ‘win-win’ scenario.

Whilst it’s not impossible for valuations to be carried out internally, an independent and expert valuation can provide credibility, from a business owner’s perspective as well an investor’s. Maximizing a company’s value is a very different concept to simply maximizing profits, and an independent advisor will be able to take a holistic approach to this. An independent advisor will use detailed valuation methods and select the best method for your company type and stage.

Aside from the obvious evaluations of cash flow, liquidity, and profit, an independent advisor will ensure you include important considerations that you may not have thought about, such as within what stage the company is operating (idea, development, start-up or expansion), the level of competition within that industry, sources and level of risk, and ultimately the survival rate of the company. With the developments and growth of e-commerce, it’s also important to consider how valuations will change in the digital world. Evaluating intangible assets is now as important as traditional asset-based valuations.

Having a clear understanding of a company’s valuation is important, but being confident that it is accurate is vital in empowering better business decisions and ensuring transparent and streamlined negotiations.

Advisors M.E. specialise in company valuations for businesses in the Middle East. The team also assist with a range of financial requirements, including corporate finance, investment management, accountancy services and strategic financial planning.

Mohammed Siddiqui is Managing Director of Advisors M.E. and began his corporate career with Deloitte and Touche. He has over 20 years’ experience of helping businesses of all sizes across the MENA region. For further information on how to value your business, contact Mohammed on mohammed@advisorsme.com, or call a member of the team on +971 7207 6683

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