An entrepreneur starts a business. At first he/she is able to handle all the tasks, but the company is growing and there is a need to put another person on the team. Due to the high cash requirement of the business, instead of hiring someone, he/she decides to bring a new partner. When it comes to defining investments and equity participation, both ask: How much is the company worth ?
Many people have already experienced this situation, both as an entrepreneur and as an investor. In most cases, opinion-based negotiation is conducted until a middle ground is found. The question is: could anything have been done better?
Yes. The answer is a business valuation with our consultants. In other words, business valuation is the science that serves to give companies fair market value. Although it is a study that can become quite complex in its mathematical basis, its premise is quite simple.
In other words, how much will it generate for profit, or positive cash flow, throughout its existence? It seems complex and philosophical, but there are several techniques to perform an evaluation work. We will talk about it below.
Business valuations are required in the following cases:
- Private equity
- Preparation for a transmission
- assignment
- Merger.
- Capital increase.