Capability to enhance the valuation of a business
Valuation is more of an art than science. The valuation of a business is a highly complex subject as there is no standard market to refer to. Here we are not talking about the statutory valuation done by a certified value for the purpose of payment of some minimum tax to the government. In the small and medium enterprises, many times the valuation done by certified valuer itself is taken as the business valuation for the purpose of transaction. It should be noted that the valuation done by a certified valuer finds the value only for compliance purposes and payment of a certain minimum tax expected by the government.
The parties into equity transactions are free to value there business at any other value, even anything substantially different from the valuation by a certified valuer, based upon their understanding of the potential of the business. Valuation depends a lot upon the time of transaction. Hence, equity transactions should be properly timed. Apohan understands the right to undertake a business sale. The valuation of a business also lies in the eyes of the buyer. Strategic investors with very synergies would value a business at higher value. The investors seeking control accord value to control in the company. In case of a financial investment in the equity of a business by financial institute, there is very less scope of synergies and the valuation would be lower.
Valuation also depends upon the legacy, brand , professionalism, quality of Management, it policies, strategy, historical financial performance, future of the product, trend in market, etc. The management of the company needs to undertake certain steps to improve its score on each of these aspects. Apohan studies the business environment, company environment, market environment and formulates strategy to realise higher valuation in the given circumstances. Apohan has integrated understanding of the business strategy, financial strategy, investment strategy, financial management, funding strategy, corporate management, corporate development, etc. It puts together all these pieces to enhance the intrinsic valuation,, value of synergies, circumstantial value, potential value, structural value, etc.
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