What is valuation in business, and why is it important for a company?
If you are seeking investments for growth, selling, or buying a company, you will need business valuation. This is a financial analysis conducted by experts with the necessary qualifications. Business valuation can be based on various criteria: income, assets, potential, convenience of location, and market competitiveness.
An internal audit is certainly possible if there are competent and experienced specialists within the team. However, it will be less objective than an external evaluation. Moreover, decision-makers in collaboration, mergers, investments, or lending require proof of the business’s value through an independent expert assessment. Specialists follow specific business valuation standards and business valuation formulas in their business valuation calculators, and the result of a financial audit is a report completed and certified according to all local legal requirements.
Why a company needs a business valuation
The reasons for ordering business valuation services in UAE can vary:
- attracting investments or loans;
- the need for business restructuring: liquidation, merger, acquisition;
- buying or selling a company;
- division of property when founders withdraw from the comany;
- annual financial reporting for VAT payers;
- understanding the value of a business in the market for further planning of its development.
Business valuation services at Dynasty Business Adviser
We provide professional service business valuation that helps our clients get:
- quick results if the timeframe is tight;
- an independent and objective assessment that can be trusted;
- high-quality expertise.
Why choose our company? Because we:
- ensure a comfortable cooperation process;
- provide complete data confidentiality;
- Evaluate companies of any scale, from small private enterprises to large corporate businesses with multiple representative offices and branches;
- work with various sectors such as financial institutions, construction, shopping centers, salons, stores, marketing, and advertising services;
- operate with companies located in different jurisdictions, both on the mainland and in Free Zones.
Business valuation process
Business valuation methods we use
It is important to choose the method that best suits the client’s needs since the reasons for ordering a company valuation vary. All business valuation approaches can be roughly divided into four types: cost, income, market, and efficiency evaluation. Cost and market approaches are usually applied for company sales, while income and efficiency evaluations are for strategic plans such as attracting investments or partnership offers. Learn how to calculate business value using the information provided below.
|
Method |
Description |
Approach |
|---|---|---|
|
Asset-based approach |
This method calculates the company’s value based on the invested assets: property, equipment, inventory, and securities. After settling all financial obligations, commissions, and debts, it determines the remaining funds. The evaluation can include both tangible and intangible assets, such as inventions, trademarks, and computer programs. |
Cost-based |
|
ROI – Return on investment check |
This method assesses the efficiency of marketing or advertising expenditures. The ROI formula is: (Revenue – Costs) / Costs × 100%. If the ROI is positive, the advertising campaign is considered successful. |
Efficiency evaluation |
|
Balance sheet value assessment |
This method is used to determine the estimated value of an asset, such as an enterprise’s property complex, solely based on its balance sheet data. |
Cost-based |
|
Liquidation value assessment |
This method considers only the company’s most liquid assets, such as property, equipment, and inventory, minus liabilities. |
Cost-based |
|
Capitalization method |
This method determines business profitability. The calculation formula is: V=D/R, where V is the value, D is net income, and R is the capitalization rate. |
Income-based |
|
Discounting method |
This method accounts for future cash flows but brings them to a specific point in time (e.g., today). The calculation formula is: V = (1+r)t / D, where (r) is the discount rate and (t) is the number of years. |
Income-based |
|
Market value |
In this method, comparable objects are analyzed, provided there is sufficient information on transactions and expenses. |
Comparative |
Tools we use
To perform the task competently and professionally, modern analytical tools are indispensable, especially when dealing with large data sets. We use online services and software such as Microsoft Power BI, SAP, QuickBooks, Tally ERP 9, and Zoho Books, for accounting, data analysis and visualization, and dashboard creation.
As a result, you receive a clear, easy-to-read, and well-formatted document that will undoubtedly be accepted by the relevant authorities.
How to calculate business valuation
The cost of business valuation services in Dubai or other emirates is calculated individually, as it depends on factors such as the:
- volume and type of data;
- software used;
- task urgency;
- availability of all necessary documents (legalized, formatted, and approved) to be attached to the company valuation report
Where we operate
We work throughout the United Arab Emirates, including Dubai and Free Economic Zones. As a licensed agent, our company addresses legal, notarial, and financial matters of almost any level, from document preparation and formatting to company registration and liquidation. Among our main services are legal and accounting support, which includes annual company audits. Therefore, we have got significant experience in this area.
Conclusion
Timely business valuation in the UAE’s dynamic and changing market lets you stay informed about your company’s financial situation and performance. It provides an opportunity to attract investments or take advantage of partner offers for mergers/acquisitions. If you’re in search of reliable and reputable valuation companies in Dubai or another UAE zone, contact Dynasty Business Adviser. Our team’s high level of qualification is confirmed each time we fulfill a new request. We know that no two businesses are the same, and we understand that the most valuable resource in the East is an impeccable reputation.
