There are times when a business valuation process is necessary. What is it and in what situations is a business valuation carried out?
Definition of valuation
In itself, valuation refers to the process that seeks to determine the financial value of the assets held by a person or organisational unit. Business valuation is, by analogy, a process that seeks to determine the exact value of a company in monetary units. It is carried out on the basis of valuation methods developed by specialists.
A number of business valuation methods can be identified – income conventional and unconventional, asset-based, comparative, mixed, and unconventional. Depending on the purpose for which the valuation is performed, different methods are usually used.
Valuation is performed for several of the most basic purposes: mediation, argumentation, decision-making and hedging.
In what situations is a business valuation carried out?
1. buying or selling
2. mergers and divisions of undertakings
3 Liquidation, arrangement or bankruptcy proceedings
4. planning of future activities
5 Verification of creditworthiness
6. civil law proceedings