Business Valuations
Many companies and businesses are occasionally required to conduct a company valuation and/or business valuation to determine the ‘market value.’ Performing a valuation is relevant in various situations. Typically, a company valuation is done for the purpose of selling shares (bringing in an investor) or compensating a departing partner. Additionally, divorcing couples who own businesses are often required to conduct a company and/or business valuation to include the value as part of the resource balancing process during the divorce proceedings. Sometimes, a company valuation is needed for the purpose of merging or splitting companies, or to contest a tax assessment on the sale of shares, and similar cases.
A company valuation, as the name implies, is an assessment rather than an exact calculation. It is based on the use of accepted economic formulas in the field. The values considered are based on actual data from the company’s profit and loss reports over recent years, and projected future profits, estimated based on past experience and the current and expected state of the industry in which the company operates, as well as the broader economic environment.
As part of the analysis conducted for calculating a company valuation and predicting the business’s profitability in the coming years, the cash flow of the business is examined, existing and future obligations are identified, significant contracts impacting the company’s revenue and expenses are reviewed, and the company’s assets, both tangible and intangible (including goodwill), are assessed in terms of ownership, value, and income-generating potential for the business.
A company valuation can be performed using several commonly accepted methods, the most frequent being the Discounted Cash Flow (DCF) method, the Net Asset Value (NAV) method, and the multiples method. The experts in our firm’s economic department have extensive experience in performing company and business valuations for various industries and sectors, for a wide range of needs. They possess advanced financial and accounting knowledge, enabling our firm to provide professional, reliable, and efficient service, with thorough and high-quality work based on accepted academic standards.
When conducting a company valuation, after identifying the company’s activities, the sector it operates in, and understanding its financial history, the economic department selects the appropriate valuation method for the business and/or a combination of methods and analyses, based on the nature of the business, the purpose of the valuation, its ability to continue operating as a going concern, and other factors.
Our firm, Michael Weizman & Co. – Financial Advisory, has extensive experience in performing valuations for our clients as well as in court-appointed cases in Israel. Senior accountants in our firm are included in the expert pool of Israel’s courts, and accordingly, are regularly appointed to prepare expert opinions for court or economic and accounting opinions, as well as to perform resource balancing assessments before divorces.
An expert from our firm will be happy to assist you with this service. Contact us with no obligation.
