Knowledge base item

How is a business valuation prepared?

An objective valuation of your company

Abusiness valuation indicates the economic value of your company. At certain points in your career as an entrepreneur, it is necessary to know the objective value of the business. This may occur when you want to transfer your business to a family member, bring an investor on board orsell your business to an external party. To be completely objective, it is advisable to have your company valued by a registered valuer affiliated with the NiRV (Netherlands Institute of Registered Valuators). But what actually happens when your company is valued?

Introduction and inventory

The valuation process starts with an introduction. It is important to know who the entrepreneur is. What are the motives behind the company. What does the company do? In which market is it active? To determine the approach of the business valuation, it is important to know the purpose of the valuation. Has a business valuation already been carried out by a third party and do you want a second opinion, do you want to sell shares to your staff, do you have a conflict with fellow shareholders, are you looking for an investor to continue to grow or is it in the context of a business takeover to get an indication of the price.

The purpose of the valuation ultimately determines the approach to the valuation. Fora business transfer within the family, it is often preferable to have the lowest possible valuation, while for an investor or sale, it is more beneficial for you as an entrepreneur to receive a high business valuation.

Information exchange

To be able to make an objective assessment, it is important to have as much information as possible at one's disposal. This is why the process of exchanging information often takes several weeks. It varies from requesting documentation to discussing certain documents that have been provided. It is important that everything is interpreted correctly in order to avoid misunderstandings.

First of all, the financial information will be studied. How has your company developed in recent years? There will be looked at different items such as turnover, costs, profit and loss, special items. An analysis is made of these items, looking at benchmarks and competition.

In addition, the non-financial information is examined. This includes product-market combinations, the business model, taxation, legal matters and corporate culture. The non-financial assets within your organization may represent more value than the so-called 'hard euros'.

Validated draft report

When the information is processed, a draft report is prepared. This is treated within Florijnz with the 6 eyes principle, to ensure that it is illuminated from different sides. It is important that your advisor follow certain guidelines, to ensure that the business valuation outside your organization represents value.

Florijnz is a member of the NiRV. The NiRV is the professional association to which all Register Valuators in the Netherlands are affiliated. A Register Valuator or RV is a financial expert who specializes in determining the value of a company. Not everyone can call themselves an RV. You become a Register Valuator after successfully completing a two-year postgraduate course. Only then do you have the knowledge and expertise to value a company and to carry out the most complex valuation issues.

Presentation of the business valuation

When the report is validated, the final presentation is prepared. This will be presented to you by us, while enjoying a Bossche bol. We discuss the assumptions and present the value-adding elements. During the presentation, you will get to know your company in a completely different way. You will find out what drives the value of your company, objectively tested. The process of gaining knowledge about the most valuable within your company is never a waste of time and effort.

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Hans MinnaarFounder and director

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